| With the constant improvement and the rapid development of china's capital market,the capital market is closely related to the equity capital cost measurement problem,which is increasingly attracting the attention of financial practice and academia.As is known to all,equity capital cost is to carry on the dividend distribution of listed companies,investment and financing decisions,working capital management decisions and company performance evaluation of basic reference indexes,and it is also an important parameter to assess the value of listed companies.Therefore,the accurate measurement of it plays a crucial role in the field of corporate finance.How to accurately estimate equity capital cost,domestic and foreign scholars have came up with many valuation models and methods,who use the empirical data of the valuation model for effective empirical survey and research,however,so far,no one way can let the most scholars generally accepted.For equity capital cost estimate,practice and academia generally adopt two kinds of methods:One kind is the traditional estimation model,which is based on market risk return model in the past the cost of equity capital,is the average rate of return on equity capital cost as a future expected unbiased estimation,such as Capital Asset Pricing Model(William Sharp,1964),Arbitrage Pricing Model(Ross,1976),and the three factors of Fama-French model,and so on;Another kind is a abnormal profit model,namely The Residual Income Model,which is the use of the existing stock price and analysts about future earnings per share forecast data to estimate equity capital cost,such as CT Model, GLS Model,OJ Model.Although traditional capital asset pricing model assumptions are strict,but in practice,it is still one of the most widely used models.domestic and foreign scholars spare on effort to study and improve the CAPM,and can make it more suitable for the modern capital market under the condition of the application.However,the traditional capital asset pricing model also has its own insurmountable obstacles,an obvious characteristics of the model is to use the past income or dividend to calculate equity capital cost.With the benefits of the past or dividend covers the market to changes of the expected enterprise value,so the accuracy of the past data to calculate the cost of equity capital is poor(Fama-French,1996).With the deepening of economic globalization and increasingly developed capital market, domestic and foreign scholars began to try to adopt the residual income model to estimate equity capital cost.Core idea of this method is use the current stock price of the listed company and securities analyst earnings forecasts of future data to estimate the cost of equity capital.The application of this model in a foreign country is growing,and the results are ideal.Because the assumptions of this model is loose,with the continuous improvement of the capital market in china in recent years,for the wide application of this model in China has laid a solid foundation.The writing motivation of this paper is using the CAPM model and PEG model investigation of Chinese listed companies from 2010 to 2012 of equity capital cost,and then through the empirical comparison which one model on Chinese capital market has more explanatory power.First of all,this paper reviews and summarizes the relevant literatures of the existing empirical research about equity capital cost estimation at home and abroad.Secondly, this paper introduces and analyses the related theory. Thirdly, this paper takes Shanghai and Shenzhen A-share listed companies in 2009 – 2012 as a study sample, by constructing a test regression model and using SPSS 17.0 statistical software for statistical the relevant variables and regression analysis,which test the estimation model on Chinese capital market has more explanatory power.Finally, this paper draws the related conclusions, puts forward to the corresponding policy recommendations and illustrates the research deficiency and the future research direction. |
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