Growth of Housing Prices : A Study on The Implications for Costof Equity in Sweden

Sammanfattning: This study aims to investigate whether growing housing prices in Sweden have an effect on costof equity for Swedish firms. Stemming from prior research linking growing housing prices tolower degree of risk aversion for households, we hypothesize a negative relationship betweengrowth of housing prices and cost of equity capital. We build our study on data from 1235 yearspecific observations from firms listed on the Stockholm small-, mid- and large cap, between2009-2016. Considering a weak coefficient, our results should be considered as inconclusive onthe relationship between growing housing prices and cost of equity capital in Sweden. Our studycontributes to the body of research regarding the economical life of a household, collective riskpreferences and increased understanding in factors influencing cost of equity capital for firms.