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On the Use of Beta in Regulatory Proceedings: A Comment

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  • Stewart C. Myers

Abstract

The purpose of this comment is to provide further clarification of the usefulness of Beta as a measure of risk in the regulatory process. Breen and Lerner list several of the problems in using this coefficient and argue that a great deal of caution is necessary when interpreting its meaning, but they fail to provide sufficient or correct reasons for their concern. Although the comment is critical of the Breen-Lerner paper, it also redirects attention to the real problems associated with using the Beta coefficient in regulation.

Suggested Citation

  • Stewart C. Myers, 1972. "On the Use of Beta in Regulatory Proceedings: A Comment," Bell Journal of Economics, The RAND Corporation, vol. 3(2), pages 622-627, Autumn.
    • Handle: RePEc:rje:bellje:v:3:y:1972:i:autumn:p:622-627
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    Cited by:

    1. Frankfurter, George M. & Phillips, Herbert E., 1996. "Normative implications of equilibrium models: Homogeneous expectations and other artificialities," Journal of Economic Behavior & Organization, Elsevier, vol. 31(1), pages 67-83, October.
    2. Darryl Biggar, 2023. "A re-examination of the foundations of the cost of capital for regulatory purposes," Journal of Regulatory Economics, Springer, vol. 64(1), pages 1-33, December.
    3. J. Andrew Coutts & Terence Mills & Jennifer Roberts, 1997. "Time series and cross-section parameter stability in the market model: the implications for event studies," The European Journal of Finance, Taylor & Francis Journals, vol. 3(3), pages 243-259.
    4. Phillips, H. E., 2000. "Toward Finance With Meaning, The Methodology of Finance: What it is and What it Can Be (JAI Press, Greenwich, Connecticut, 1996), pp. xx+260, $76 George M. Frankfurter and Elton G. McGoun," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 279-284, June.

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