The four post-2000 data points suggest that the average corporate hurdle rate has been quite stable for at least ten years, showing no evidence of a downward shift in concert with the general decline in interest rates over this period. Indeed, in the 2003 survey study, more than half of the respondents claimed that they had not changed their hurdle rate in the three years leading up to the survey, suggesting the recent prevailing level extends back at least to 2000. The results from two earlier surveys indicate that the average hurdle rate was about 2% higher in the 1980s and early 1990s. Even so, the difference pales in comparison to the 8 percentage point drop in interest rates between mid-1985 and 2012; moreover, the median and modal responses appear to be unchanged or close to unchanged over the entire period. The fact that the mode has been a constant 15% throughout the entire period suggests that hurdle rates are determined using rough rules of thumb, rather than fine-tuned calculations, an interpretation that would account for the lack of sensitivity to interest rates reported by vast majority of the firms in our study. [Link]
So much for studying Weighted Average Cost of Capital (WACC)!