© 2015 Universidad Nacional Autónoma de México, Facultad de Contaduría y Administración. The present research has two objectives. First, we study the determinants of stock risk. Second, we analyze whether International Financial Reporting Standard (IFRS) implemented in the Spanish market in 2005 hasaffected these determinants. It is quite important for both entrepreneurs and management professionals tounderstand the accounting information and macroeconomic factors that explain stock risk, since it suggestswhich factors can be used to estimate this risk, and hence, to analyze the evolution of cost of capital ordiscount rate. The discount rate plays an important role in wide range of financial decisions; whose valuedepends on the risk among other factors. Therefore, it is significant to obtain an objective estimation ofdiscount rate, which is difficult to handle specifically in the context of small and medium sized enterprises(SMEs). Effective management involves the ability to forecast future changes, capture positive effects, andminimize negative ones. Once we find out the variables that can be utilized to explain the risk, we can observeand analyze their evolution to anticipate future changes in the discount rate.
- Accounting information
- Cost of equity capital
- International Financial Reporting Standard (IFRS)
- Macroeconomic information
- Small and medium enterprises (SMEs)