Cost of Capital in Price-regulated Companies: the Case of Estonia

Authors

  • Priit Sander University of Tartu

DOI:

https://doi.org/10.15157/tpep.v17i0.924

Keywords:

price regulation, cost of capital, market risk, currency risk

Abstract

In case of price-regulated companies it is the role of appropriate government agencies to introduce clear, internally consistent, theoretically sound, and unambiguous methodology for finding the regulative cost of capital. The aim of the paper is to describe and analyze the cost of capital estimation methodology for regulated companies in Estonia and discuss some issues arising in applying this methodology. The current paper focuses on two topical issues associated with the estimation of regulative cost of capital in Estonia: estimation of market risk premium and inclusion of currency risk premium into the cost of capital. Current turmoil in financial markets has increased investors’ risk aversion as well as level of risks.

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How to Cite

Sander, P. (2009). Cost of Capital in Price-regulated Companies: the Case of Estonia. Estonian Discussions on Economic Policy, 17. https://doi.org/10.15157/tpep.v17i0.924

Issue

Section

Articles. Artikeln. Artiklid