Corporate Life Cycle Identification: A Model Based on Relationship Between Return on Equity and Cost of Equity

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216305%3A26510%2F17%3APU125983" target="_blank" >RIV/00216305:26510/17:PU125983 - isvavai.cz</a>

Result on the web

<a href="http://hdl.handle.net/10195/69594" target="_blank" >http://hdl.handle.net/10195/69594</a>

DOI - Digital Object Identifier

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Result language

angličtina

Original language name

Corporate Life Cycle Identification: A Model Based on Relationship Between Return on Equity and Cost of Equity

Original language description

The theory of shareholder value maximisation implies that the ultimate aim of each entrepreneur is to increase the market value of the company, i.e. to maximise the wealth of shareholders. This concept assumes that the returns to shareholders should outperform the cost of capital. The higher the spread is, the better the position of shareholders. The capital assets pricing model has been very often used for calculation the cost of equity as implicit costs, where the risk-free rate, the expected return of the market and the premium to operational and financial risks in the form of beta coefficient is considered. Moreover, the return on equity is significantly dependent on the corporate life cycle. The purpose of this paper is to develop an innovative model identifying stages of the corporate life cycle while using two variables: the rate of economic profit and the share of operational and financial risk within the total entrepreneurial risk. The model is verified by using data of a selected company. Identifying stages of the corporate life cycle should simplify the risk management and subsequently raise the capital access.

Czech name

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Czech description

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Type

J_SC - Article in a specialist periodical, which is included in the SCOPUS database

CEP classification

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OECD FORD branch

50202 - Applied Economics, Econometrics

Project

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Continuities

S - Specificky vyzkum na vysokych skolach<br>I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2017

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Sborník vědeckých prací University Pardubice

ISSN

1211-555X

e-ISSN

1804-8048

Volume of the periodical

XXIV

Issue of the periodical within the volume

41

Country of publishing house

CZ - CZECH REPUBLIC

Number of pages

12

Pages from-to

67-78

UT code for WoS article

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EID of the result in the Scopus database

2-s2.0-85038371461