Common-equity flotation costs and rate making
Journal Article
·
· Public Util. Fortn.; (United States)
OSTI ID:5868878
The proper treatment of equity flotation costs has caused much confusion. Had such costs been either capitalized in the past or else expensed on an as-incurred basis, there would be no problem; but since neither of these practices has generally been followed, the discounted cash flow return must be adjusted to produce a fair rate of return on book equity. Further, the adjustment is always required, irrespective of whether or not a company has plans to sell new stock in the future, and the adjusted return must be earned on total equity, including retained earnings. Otherwise, it would be impossible for investors to earn the cost of equity, even under prudent and efficient management. 11 references, 6 tables.
- Research Organization:
- Univ. of Florida, Gainesville
- OSTI ID:
- 5868878
- Journal Information:
- Public Util. Fortn.; (United States), Journal Name: Public Util. Fortn.; (United States) Vol. 115:9; ISSN PUFNA
- Country of Publication:
- United States
- Language:
- English
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