Time-varying cost of equity capital in Southeast Asian countries

This paper investigates variation in the cost of equity capital for the Southeast Asian countries using firm-level data over the period of 1990-2004. It is found that decreases in the firm-level cost of equity capital have been associated with stock market liberalization and securities market development. The results of the present study suggest that earlier empirical evidence regarding the decrease in the cost of equity capital using country-level data cannot be generalized to different types of firms. There has been significant time variation in the cost of equity capital within countries and across firms.