IDEAS home Printed from
   My bibliography  Save this article

Measuring the Cost of Equity of Emerging Market Firms: The Case of Malaysia


  • Swee-Sim, Foong

    () (Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur)

  • Kim-Leng, Goh

    (School of Distance Education Universiti Sains Malaysia, 11800 USM ,Pulau Pinang)


Valuation in an emerging market like Malaysia poses to be a great challenge because there is no clear single 'best practice' for the valuation of assets and securities in emerging markets. Adopting some of the emerging market models reviewed in Pereiro (2001), together with the two-factor CAPM models proposed in this study, we make a comparison between standard risk measures and downside risk measures to estimate the cost of equity of Malaysian firms over the period of 2000–2007. Overall, the results are consistent with the literature which supports downside risk measures over standard risk measures. Also, our model, which considers both local and global risk factors, has higher explanatory power than models that consider only one kind of risk factor. Most importantly, the results show that unsystematic risks, or firm-specific risks, may have increased in recent years.

Suggested Citation

  • Swee-Sim, Foong & Kim-Leng, Goh, 2010. "Measuring the Cost of Equity of Emerging Market Firms: The Case of Malaysia," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 6(1), pages 25-46.
  • Handle: RePEc:usm:journl:aamjaf00601_25-46

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. repec:krk:eberjl:v:1:y:2013:i:4:p:37-56 is not listed on IDEAS
    2. Yury Dranev & Sofya Fomkina, 2013. "An asymmetric approach to the cost of equity estimation: empirical evidence from Russia," HSE Working papers WP BRP 12/FE/2013, National Research University Higher School of Economics.

    More about this item


    CAPM; cost of equity; downside risk; firm dex;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:usm:journl:aamjaf00601_25-46. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journal Division, Penerbit Universiti Sains Malaysia). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.