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Cost of equity capital in small and medium sized private companies: theoretical considerations and empirical and case-study's results concerning SMEs in southwest Germany

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  • Bernd Britzelmaier

Abstract

Cost of capital rates are used for a number of purposes in finance and accounting such as the determination of imputed interest, investment appraisal or value-based management. While stock-listed companies are able to use capital market oriented methods to determine their cost of equity such as CAPM or APT other companies have to follow different approaches. The aim of this paper is to summarise and update research papers published during the last couple of years dealing with the relevance and application of cost of equity in SMEs (Britzelmaier et al., 2013, 2014, 2015). After a brief introduction, the characteristics of SMEs are discussed. A critical overview of fundamentals and common calculation methods of the cost of equity capital is provided. After the literature review findings of empirical studies are presented as well as findings of a case study. A conclusion and an outlook are given.

Suggested Citation

  • Bernd Britzelmaier, 2019. "Cost of equity capital in small and medium sized private companies: theoretical considerations and empirical and case-study's results concerning SMEs in southwest Germany," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 22(1), pages 4-17.
    • Handle: RePEc:ids:ijbglo:v:22:y:2019:i:1:p:4-17
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    Cited by:

    1. Anouar Faiteh & Mohammed Rachid Aasri, 2022. "Accounting Beta as an Indicator of Risk Measurement: The Case of the Casablanca Stock Exchange," Risks, MDPI, vol. 10(8), pages 1-13, July.

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