Title

Cash flow risk and the implied cost of equity capital

Authors

Huaibing Yu, Kean University

Document Type

Article

Publication Date

1-1-2023

Abstract

This study examines the effect of cash flow risk on the implied cost of equity capital. Empirical results indicate that firms with higher levels of cash flow risk are associated with more expensive equity financing. This positive relationship holds firmly after addressing potential endogeneity and is robust to alternative measures of cash flow risk and the implied cost of equity capital. Moreover, under the influence of firm quality, the positive relationship is more pronounced for firms with younger age and smaller size.

Publication Title

Applied Economics

DOI

10.1080/00036846.2023.2257032

Recommended Citation

Yu, Huaibing, "Cash flow risk and the implied cost of equity capital" (2023). Kean Publications. 293.
https://digitalcommons.kean.edu/keanpublications/293