Beta controversies

Силвије Орсаг; Дејан Микеревић

doi:10.7251/ACE1624009O

Authors

Силвије Орсаг Економски факултет Свеучилишта у Загребу
Дејан Микеревић Економски факултет Универзитета у Бањој Луци

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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