Existence of Size Premium: A Review of Literature and Suggestions for Future Research

The text provides a summary of previous research on the existence of size premium as a part of discount rate. The review shows that the studies provide very different findings. However, some common points may be identified. First, there are long periods with size premium being non-present in the markets. Second, the results of analyses show significant differences between the individual national markets. Third, the liquidity factor seems to play role in size factor.