Realized Return vs Required Return in the Argentinean Stock Market 2008-2017

11 Pages Posted: 10 Jan 2018

Date Written: January 7, 2018

Abstract

In Finance, it is widely accepted that its main objective is the shareholder value creation. To achieve this objective, the shareholder return must be higher than its cost of capital. We calculated the annual realized return (ARR) in the Argentinean Stock Market for a sample of 60 firms during the period from December 2008 to December 2017, and then we compared the results with the required return estimated by an adjusted CAPM model, adding a country risk premium. The results showed that half of the companies included in the sample observed returns higher than their cost of capital, and therefore, created value for shareholders, while the other half destroyed value, including negative returns in the case of nine companies.

Keywords: shareholder value creation, expected return, required return, realized return

JEL Classification: G12, G14, G30, G32

Suggested Citation

L. Dumrauf, Guillermo and Martinez, Juan Ignacio, Realized Return vs Required Return in the Argentinean Stock Market 2008-2017 (January 7, 2018). Available at SSRN: https://ssrn.com/abstract=3097857 or http://dx.doi.org/10.2139/ssrn.3097857

Guillermo L. Dumrauf (Contact Author)

University of CEMA ( email )

1054 Buenos Aires
Argentina

Juan Ignacio Martinez

Universidad Nacional de Rosario ( email )

Rosario
Argentina

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