The Cost of Capital in Japan: Recent Evidence and Further Results

44 Pages Posted: 16 Aug 2001 Last revised: 19 Sep 2010

See all articles by Albert Ando

Albert Ando

University of Pennsylvania and NBER (Deceased)

Alan J. Auerbach

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: May 1990

Abstract

We extend our recent work measuring the cost of capital in Japan and the United States by considering several questions that such results raised. Among our findings are:(1) The small firm - large firm distinction appears to be more significant in Japan, not in the United States;(2) Correcting Japanese accounting statements for cross-holding raises the estimated Japanese cost-of-capital by about 1 percentage point;(3) Correcting Japanese accounting statements for unmeasured returns to land has a significantly more important effect: the most conservative correction we attempt raises the implied Japanese return to capital to parity with the United States during the mid-1980's.

Suggested Citation

Ando, Albert and Auerbach, Alan Jeffrey, The Cost of Capital in Japan: Recent Evidence and Further Results (May 1990). NBER Working Paper No. w3371. Available at SSRN: https://ssrn.com/abstract=263423

Albert Ando

University of Pennsylvania and NBER (Deceased)

N/A

Alan Jeffrey Auerbach (Contact Author)

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-643-0711 (Phone)
510-643-0413 (Fax)

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, DE-81679
Germany

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