Realized Return vs Required Return in the Argentinean Stock Market 2008-2017
11 Pages Posted: 10 Jan 2018
Date Written: January 7, 2018
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
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