The equity risk premium is a key element of allowed rate of return for regulated infrastructural utilities. Since the 2008 economic and financial crisis, capital markets conditions and macroeconomic imbalances have deeply affected market risk premia and risk free rates, in particular in the Eurozone: new challenges for regulation have arisen as a consequence. We address the recent economic literature on the determinants of equity risk premium, reviewing the main estimation methods adopted by regulators. We briefly analyze national regulation Authorities’ approaches to equity risk premium and their recent evolutions. Finally, we conclude with some considerations on the role of equity risk premium in regulatory setup.
La regolazione dell’equity risk premium: una prima analisi istituzionale
Umberto Monarca
;Giuseppe Surdi
2017-01-01
Abstract
The equity risk premium is a key element of allowed rate of return for regulated infrastructural utilities. Since the 2008 economic and financial crisis, capital markets conditions and macroeconomic imbalances have deeply affected market risk premia and risk free rates, in particular in the Eurozone: new challenges for regulation have arisen as a consequence. We address the recent economic literature on the determinants of equity risk premium, reviewing the main estimation methods adopted by regulators. We briefly analyze national regulation Authorities’ approaches to equity risk premium and their recent evolutions. Finally, we conclude with some considerations on the role of equity risk premium in regulatory setup.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
