VoxEU.org: Recent Articles

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Global pricing of carbon-transition risk Posted: A company's carbon-transition risk – associated with curbing carbon emissions within a relatively short period of time – is proportional to the size and growth rate of the company's carbon emissions. This column asks whether companies with different carbon emissions have different stock returns. The total level of a company's CO2 emissions and the year-by-year growth in emissions significantly affect its stock returns in most geographic areas of the world. The increasing cost of equity for companies with higher emissions can be a form of carbon pricing by investors seeking compensation for carbon-transition risk.

Intangible value Posted: Intangible assets are absent from traditional measures of value, despite their large and growing importance in firms' capital stocks. As a result, the fundamental anchor for value that uses book assets is mismeasured. This column presents a new intangibles-adjusted value factor based on an improvement to the traditional Fama and French approach. The new measure prices assets as well as or better than the traditional value factor but yields substantially higher returns. Both asset pricing researchers and practitioners can benefit from incorporating intangibles in their fields of work.

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