Ranking Every Japanese Listed Company by Cost of Equity

The top 100

A high Ke reflects real risk factors

It's tempting to look at this list and assume these are simply the "riskier" companies — and that instinct isn't far off, with an important caveat. CAPM doesn't price total share-price volatility or company-specific risk into the equity investor's required return; it prices systematic risk — the portion of volatility that diversification cannot remove. Under CAPM (Ke = Rf + β × ERP), β measures how sensitively a stock's returns move with the broader market. The companies at the top of this list carry high estimated betas.

A high Ke can reflect financial leverage, cyclicality, business risk, operating leverage, or an unstable beta estimate — often several at once. Because we relever the sector-average beta by each company's own D/E (interest-bearing debt ÷ equity market cap) — βL = βU × (1 + (1 − tax rate) × D/E) — a higher D/E mechanically produces a higher Ke wherever this method is used. For the names at the top of this list, elevated leverage is doing most of the work: #1 Abalance carries D/E = 7.1x, #5 Nissan Motor D/E = 7.1x, and #4 Nippon Sheet Glass D/E = 12.4x.

Equity holders sit behind creditors in the capital structure — a residual claim. Interest and principal get paid before any distribution to shareholders, even when earnings or cash flow deteriorate. More debt therefore amplifies the swings in what's left over for equity holders. That said, this is only one contributor to systematic risk: a high Ke is not, by itself, a direct read on default risk or liquidity stress.

This is a snapshot at a single point in time

The denominator of D/E (interest-bearing debt ÷ equity market cap) is the day's share price itself. Holding every other input constant — debt balance, unlevered beta, statutory tax rate, Rf, ERP, and shares outstanding — a share-price decline alone will mechanically push D/E up, and the relevered beta along with it, raising the estimated Ke. Take #1-ranked Abalance: starting from its Ke of roughly 46.2% as of August 9, 2026, a 10% price decline (all else equal) implies a Ke of roughly 50.2%; a 20% decline implies roughly 55.2%. A 20% price increase, conversely, implies roughly 40.2%.

That said, this isn't purely about day-to-day noise. Where a price level has persisted for a stretch of time, it may reflect the market's sustained read on a company's financial position and outlook. Market prices also embed growth expectations, interest rates, supply and demand, liquidity, and news flow — not leverage and earnings alone.

This price-sensitivity is especially pronounced for the companies at the top of this ranking, where the underlying regression beta was unreliable and we fall back to relevering a sector-average beta by each company's own D/E. For the large majority of companies, we instead use a directly regressed beta estimated over a trailing return window, so today's share price doesn't feed straight through D/E into Ke. Even there, though, the estimation window rolls forward over time, so recent price moves gradually work their way into the beta.

Data assumptions

• Universe: 3,512 Japanese listed companies (ex-banks/securities/insurance, ex-REITs)
• Universe / price / market-cap / Ke calculation date: August 5, 2026 (Rf = 2.80%, ERP = 5.14%, statutory effective tax rate = 30.62%)
• Interest-bearing debt: each company's latest disclosed figure available as of the date above (whichever is more recent of the latest quarterly or full-year filing)
• Directly regressed beta criterion: companies whose 2-year weekly-return OLS regression against TOPIX yields R² ≥ 0.30 use their own regressed beta
• Sector-beta fallback: companies below that R² threshold use the Damodaran Japan sector-average unlevered beta, relevered by the company's own D/E (interest-bearing debt ÷ market cap) via the Hamada formula, using the statutory effective tax rate
• Source/calculation: beluuga.ai