Asset pricing

• Pricing Indefinitely Lived Assets: Experimental Evidence

  Staff Working Paper 2023-25 John Duffy, Janet Hua Jiang, Huan Xie

  We study the trading of an asset with bankruptcy risk. The traded price of the asset is, on average, 40% of the expected total dividend payments. We investigate which economic models can explain the low traded price.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Financial markets JEL Code(s): C, C9, C91, C92, D, D8, D81, G, G1, G12

• What we can learn by linking firms’ reported emissions with their financial data

  Staff Analytical Note 2023-4 Matthew Ackman, Timothy Grieder, Callie Symmers, Geneviève Vallée

  We analyze the financial statements and stock prices of publicly traded firms incorporated in Canada that report greenhouse gas emissions. We find that these firms primarily use equity financing. We also find that equity investors increasingly account for firms’ emissions when making investment decisions but the impact appears small. This suggests that assets exposed to climate change remain at risk of a sudden repricing.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Asset pricing, Climate change, Financial stability, Firm dynamics JEL Code(s): G, G1, G3, Q, Q5