Quarterly Review
The Cost of Capital for Securities Firms
in the United States and Japan
Autumn 1991Volume 16, Number 3

Authors: Robert N. McCauley and Steven A. Zimmer

The authors use stock market valuations to construct estimates of the cost of capital for five U.S. and four Japanese securities firms in 1982-91. They seek explanations for the observed capital cost differences in macroeconomic, risk, policy, and industrial organization factors. Their analysis also contrasts the gap in capital costs between U.S. and Japanese securities firms with the corresponding gap for industrial firms and banks.

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