scholarly journals Value Creation and Competitive Advantage: Empirical Evidence from Dividend Champions of the S&P 500

2018 ◽  
Vol 13 (12) ◽  
pp. 50 ◽  
Author(s):  
Marina Damilano ◽  
Nicola Miglietta ◽  
Enrico Battisti ◽  
Fabio Creta
Keyword(s):  
Comparative Analysis ◽  
Competitive Advantage ◽  
Value Creation ◽  
Average Cost ◽  
Cost Of Capital ◽  
Weighted Average ◽  
The Us ◽  
The Cost ◽  
In Virtue Of ◽  
Research Show

The aim of the paper is to verify, through the measurement of value creation, the existence of a competitive advantage in those companies recognized as “Dividend Champions” in the S&P 500. The paper uses a quantitative and explorative method of research and is divided into two sections: in the first, it identifies, within the S&P 500, those companies that have systematically, for more than 40 years, distributed dividends that have grown each year (60 firms), and in the second, it gives a comparative analysis of the Return on Invested Capital and Weighted Average Cost of Capital of the analysed firms, in order to investigate the existence of a competitive advantage. The results of our research show that the “Dividend Champions” have, in comparison to their main competitors of reference in the US market, a lasting competitive advantage, in virtue of a higher profitability with respect to the cost of capital. Specifically, we can observe that the “Dividend Champions”, classified by sector, are also “Value Champions”, able to beat competitors and having a lasting competitive advantage

scholarly journals Market value calculation and the solution of circularity between value and the weighted average cost of capital WACC

2009 ◽  
Vol 10 (6) ◽  
pp. 101-131 ◽  
Author(s):  
Ignacio Vélez-Pareja ◽  
Joseph Tham
Keyword(s):  
Average Cost ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Cost Of Debt ◽  
Cost Of Equity ◽  
Tax Rate ◽  
Market Values ◽  
Equity Cost ◽  
Tax Payments ◽  
The Cost

Most finance textbooks present the Weighted Average Cost of Capital (WACC) calculation as: WACC = Kd×(1-T)×D% + Ke×E%, where Kd is the cost of debt before taxes, T is the tax rate, D% is the percentage of debt on total value, Ke is the cost of equity and E% is the percentage of equity on total value. All of them precise (but not with enough emphasis) that the values to calculate D% y E% are market values. Although they devote special space and thought to calculate Kd and Ke, little effort is made to the correct calculation of market values. This means that there are several points that are not sufficiently dealt with: Market values, location in time, occurrence of tax payments, WACC changes in time and the circularity in calculating WACC. The purpose of this note is to clear up these ideas, solve the circularity problem and emphasize in some ideas that usually are looked over. Also, some suggestions are presented on how to calculate, or estimate, the equity cost of capital.

scholarly journals Cost of capital adjusted for governance risk through a multiplicative model of expected returns

2011 ◽  
Vol 1 (1) ◽  
pp. 9-18 ◽  
Author(s):  
Rodolfo Apreda
Keyword(s):  
Capital Structure ◽  
Linear Approximation ◽  
Average Cost ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Multiplicative Model ◽  
Conventional Wisdom ◽  
Expected Returns ◽  
The Cost ◽  
Governance Risk

This paper sets forth another contribution to the long standing debate over cost of capital, firstly by introducing a multiplicative model that translates the inner structure of the weighted average cost of capital rate and, secondly, adjusting such rate for governance risk. The conventional wisdom states that the cost of capital may be figured out by means of a weighted average of debt and capital. But this is a linear approximation only, which may bring about miscalculations, whereas the multiplicative model not only takes account of that linear approximation but also the joint outcome of expected costs of debt and stock, and their proportions in the capital structure. And finally, we factor into the cost of capital expression a rate of governance risk.

scholarly journals USING THE CONCEPT OF TRANSACTION COSTS IN CAPITAL STRUCTURE MANAGEMENT

2020 ◽  
pp. 71-75
Author(s):  
Svetlana Viktorovna Lepeshkina
Keyword(s):  
Decision Making ◽  
Capital Structure ◽  
Transaction Costs ◽  
Average Cost ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Point Of View ◽  
Efficiency Assessment ◽  
Modern Period ◽  
The Cost

The article discusses the theoretical aspects of issues related to the assessment of capital, the formation of its structure from the point of view of making management decisions in cost formation on its attraction and maintenance. The concept of “capital” is clarified from the point of view of its formation and subsequent efficiency assessment. The approach to the formation of capital structure concepts of the modern period on the development basis is justified. The method of estimating the cost of capital and the formation of the target capital structure, based on the inclusion of transaction costs in the cost of capital, which allows you to more accurately determine the size of these costs in relation to the amount of equity and more accurately generate the weighted average cost of capital of the organization. The empirical nature of the study allows us to use the proposed method of forming the capital structure in relation to various (individual) conditions of the organization’s functioning, followed by clarification of the parameters of decision-making based on the set goals of the organization’s activities.

LA FUSIÓN CARULLA-VIVERO, ¿CREÓ VALOR?

2014 ◽  
Vol 5 (10) ◽  
pp. 93
Author(s):  
Andrés Villegas Cortés ◽  
Luz Ángela Rojas La Rota
Keyword(s):  
Average Cost ◽  
Cost Of Capital ◽  
Economic Value ◽  
Weighted Average ◽  
Value Added ◽  
Economic Value Added ◽  
Estudio De Caso

El presente trabajo busca determinar si la fusión de las empresas Carulla-Vivero ocurrida en el año 2000 generó valor. Para esto, se estudia el conceptode valor, posteriormente se explica el estudio de caso como metodología deinvestigación para concluir con la exposición del caso mismo de la fusión, ysu resultado. Una vez realizado el análisis de las dos empresas, se hace unacomparación y una valoración por dos metodologías ampliamente aceptadas:los métodos Economic Value Added (EVA) - Weighted Average Cost of Capital(WACC) y Flujo de Caja Histórico, con lo cual se explora en su interior la fusióny se explican los resultados obtenidos en ella. Finalmente, se hace una seriede observaciones, conclusiones y recomendaciones sobre la fusión, asícomo de la metodología del estudio de caso, para el abordaje de temas de laadministración.

The Weighted Average Cost of Capital for the Analysis of Innovative Projects Integrated into the Company

2021 ◽  
pp. 103-111
Author(s):  
Sergey N. Yashin ◽  
Egor V. Koshelev ◽  
Natalya A. Yagunova ◽  
Victor P. Kuznetsov ◽  
Elena V. Romanovskaya
Keyword(s):  
Average Cost ◽  
Cost Of Capital ◽  
Weighted Average
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