Survey on the concept of cost of capital in the area of accounting

Meiji Gakuin Study Group

In this report, we surveyed how the concept of cost of capital is perceived in the area of accounting. We have found that there is a relative lack of systematic consideration of the expected theoretical relationship between accounting information and cost of capital estimates. We concluded that it was necessary to clarify the relationships between the hypotheses that are currently assumed to affect the cost of capital, including the relationship with existing corporate valuation models.