The Absence of a Size Effect: Letting Go Of The Size Premium

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Training Event Transcripts
December 1, 2020
Clifford S. Ang
cost of capital
case law analysis, size premium, cost of equity, capital asset pricing model (CAPM), size effect

Summary

Many valuation practitioners believe that there is a size effect and add a size premium to their CAPM cost of equity. In this talk, Cliff Ang will demonstrate why the underlying premise behind the size effect no longer holds and discuss the academic literature and empirical evidence on the absence of a size effect. He then dives into the related issue, which is why valuation practitioners should let go of the size premium.
The Absence of a Size Effect: Letting Go of the Size Premium
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