A basic insight of capital market theory, that expected return is a function of risk, still holds when dealing with cost of equity capital in a global environment. Estimating a proper cost of capital (i.e., a discount rate) in developed countries, where a relative abundance of market data and comparable companies exist, requires a high degree of expertise. Estimating cost of capital in less-developed (i.e., “emerging”) economies can present an even greater challenge, primarily due to lack of data (or poor data quality) and the potential for magnified financial, economic, and political risks. A good understanding of cost of capital concepts is, therefore, essential for executives making global investment decisions.
Join James P. Harrington (Director, Duff & Phelps) in a deep dive into the subject of country risk. Harrington will present various frameworks for cross-border valuations and explain how to properly account for country risk in a discounted cash flow valuation.
James Harrington, Director, Office of Professional Practice – Duff & Phelps LLP, Chicago
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