| This paper establishes estimation technology system of the expected cost of equitycapital. Theory origins and model deductions of GLS, CT, O’Hanlonå'ŒSteele(2000),ETSS(2002), O（JN）, PEG, MPEG, Easton(2004) are the cores of this article. According tothe origins of theory, those eight estimation technologies can be divided into two categories:one is estimation technologies based on residual income valuation model and the other isestimation technologies based on abnormal growth in earnings valuation model. Accordingto the perpetuity growth rate in model deductions, they can be further divided intoestimation technologies with assumed growth rate and estimation technology whichestimate the growth rate and expected cost of equity capital simultaneously. Combiningwith six traditional estimation technologies of cost of equity capital and GORDON model,estimation technology system of the whole cost of equity capital is constructed. Besides,there are also some evaluations of theses models. In the last but two chapter, GLS, OJ（N）and PEG which are the three most popular models in scholar paper are used to estimate thecost of equity capital of Chinese public corporations from the21th century.Estimation technology system of the expected cost of equity capital that is constructedin this essay reflects the transformation of estimation ethos. That is the transformation fromrisk premium to internal rate of return, the transformation from asset pricing to discountedcash flow, the transformation from outside to inside. What’ more, those eight estimationtechnologies can overcome two mail flaws of the six traditional estimation technologiesand complement the shortcomings of GORDON to some extent.Above all, GLS is transformed into a quite simple practical formula which canreadily be worked out using the function of goal seeker in EXCEL in this essay. Thissimplifies the estimation progress of GLS dramatically, which surely can speed theapplication of GLS in practice. |
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