Liberalization results in initially increased capital flows into a developing country. The presence of reduced dividend yields in developing countries after liberalization suggests that the reduction in the cost of capital is permanent. Don’t 100% understand why reduced dividend yields would reduce cost of capital permanently. Please someone explain. thx
use the gordon growth model and do the maths
Dividend is part of expect return for an investor. For an firm, the expected return to investor is the cost of capital.