An analysis of some aspects of regulator
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Chang Mo Ahn; Howard E. Thompson
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Article
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1989
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Springer US
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English
β 924 KB
This paper uses a modification of the continuous time asset pricing model of Cox, Ingersoll, and Ross to analyze the effect of regulatory risk on the cost of capital. Analysis shows that random errors in setting the allowed rate of return can either increase or decrease the cost of capital depending