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Regulation of Public Utility Returns on Equity: A Critical Appraisal
Douglas A. Hayes
Financial Analysts Journal
Vol. 26, No. 5 (Sep. - Oct., 1970), pp. 102-106+112
Published by: CFA Institute
Stable URL: http://www.jstor.org/stable/4470731
Page Count: 6
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A major factor determining the potential long-term returns on common stocks of public utilities is the rate of return on equity allowed by regulatory bodies. Approaches to determining the allowable rate vary widely. Unfortunately neither legal doctrine nor financial theory offers clear-cut benchmarks for regulators to follow. The author argues that the rates of return on book equity of selected consumer-products industries are an appropriate benchmark.
Financial Analysts Journal © 1970 CFA Institute