The cost of capital in the effectiveness assessment of financial management in a company
Bibliographic Data
| ID | 19484474 |
|---|---|
| Authors | Aneta Michalak (0000-0002-0935-6674, Silesian University of Technology, corresponding author) |
| Year | 2016 |
| Volume | 7 |
| Issue | 2 |
| Pages | 317 |
| Publication date | 2016-06-30 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Oeconomia Copernicana (JOURNAL) |
| Journal identifiers | ISSN: 2083-1277 • E-ISSN: 2353-1827 |
| Publisher | Instytut Badan Gospodarczych / Institute of Economic Research (PUBLISHER) |
| DOI | 10.12775/oec.2016.019 |
| OpenAlex | W2220559030 |
| Language | EN |
| Citations received | 3 |
Financial management in a company is a decision process subject to achievement of the main goal of the company, that is its value maximization. Estimation of the cost of capital is of great significance in this area. The cost of capital affects the key decisions of the board concerning the scale of investment undertakings, determination of the target, demanded amount and pace of capital growth, shaping of optimal capital structure and other areas of financial management in a company such as capital budgeting, processes of takeovers and fusions etc. It is also a parameter in calculating the return on investment and in other analyses. The utilization of information about the cost of capital in the decision-making process in the company is strictly connected with the assessment of financial management in the company using market value added. The objective of the paper is to indicate the place of the cost of capital in assessing the effectiveness of financial management in a company, performed by the method of market value added. The considerations conducted are grounded on the assumption that if we base the effectiveness assessment of financial management in a company on the market value added growth, then the cost of capital will be one of the main parameters in each of the theoretical models presented concerning the company value pricing. In this way, the cost of capital is a parameter in the effectiveness assessment of financial management in a company at the same time. The article is of theoretical-cognitive and methodological character. It constitutes a reason for further empirical research confirming the relation proved in the theory of the relation between the cost of capital and company value, which is a basis for assessing the effectiveness of financial management in the company
Business · Capital budgeting · Capital formation · Cost of capital · Economic capital · Economic Value Added · Economics · Financial capital · Financial management · Individual capital · Market value · Market value added · Microeconomics · Return on capital · Return on capital employed · Weighted average cost of capital · Corporate Finance and Governance · Financial Reporting and Valuation Research · Risk Management in Financial Firms · Finance
| Citations per year | 0.33 |
|---|---|
| Citation span | 2017 - 2026 (10) |
| Highly cited | No |