Correlation among Cost of Capital, Book Values and Shares Prices: The Case of Kuwait Listed Companies
Year: 2013
Type: article
Abstract: The objective of this research is to examine the degree of correlation between the cost of capital from a side and shares market prices and their book values at Kuwait Stock Exchange from the other side.The notion here is that correlation of some sort is transpiring which could affect published financial information and decision making at large.The basic equity valuation model used in the study is the one developed originally by Ohlson (1995), which relates the firm's equity market value to its book value adjusted for abnormal earnings.A sample of Kuwaiti firms listed on Kuwait stock exchange is used for testing this presumption for the period between 2005 and 2011.The results showed a negative correlation between the cost of capital versus companies' book value on one side, and the cost of capital versus companies' market value on the other side. Index Terms-Book value, market value,
Authors: Mohamad H. Atyeh, Wael Al-Rashed
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W2994587196