Beta controversies

Authors

  • Силвије Орсаг Faculty of Economics, University of Zagreb
  • Дејан Микеревић Faculty of Economics, University of Banja Luka

DOI:

https://doi.org/10.7251/ACE1624009O

Keywords:

beta, CAPM, cost of capital, row beta, adjusted beta, fundamental beta, bottom up beta

Abstract

The subjects of this paper are controversies about beta coefficient. Paper discussed problems with historical estimation of beta, as well time length of sample as choosing market index. In addition paper showed simplified regression calculation of beta for Pliva d.d. stocks in excel. Presented problems can be solved with estimation of adjusted beta and addition adjustment by operating and financial leverage to calculate fundamental beta of the company. For the private companies which have no significant history of market yields beta can be establish by corporations with comparable public firms. Tis procedure is dominant to beta estimation for firms on small emerging markets as those in region. Tis approach is as well applied for bottom up beta calculations.

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Published

2016-02-29

How to Cite

Орсаг, С., & Микеревић, Д. (2016). Beta controversies. Acta Economica, 14(24), 9–29. https://doi.org/10.7251/ACE1624009O

Issue

Section

Preliminary Communication