The US Equity Valuation Premium, Globalization, and Climate Change Risks

Fisher College of Business Working Paper No. 2023-03-21

Charles A. Dice Working Paper No. 2023-21

49 Pages Posted: 15 Sep 2023

See all articles by René M. Stulz

René M. Stulz

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Craig Doidge

University of Toronto - Rotman School of Management

George Andrew Karolyi

Cornell University - SC Johnson College of Business

Date Written: August 24, 2023

Abstract

In the 2000s, US firms have higher valuations than comparable non-US firms listed only outside the US but not non-US firms cross-listed in the US. Though one would expect this US valuation premium to fall over time because of globalization, it widens for firms in developed markets by 36% and falls for firms in emerging markets by 20% after the global financial crisis of 2007-2008. This evolution is explained in part by the decreased valuation of brown firms in other developed countries relative to the US. Other potential explanations are explored and rejected.

Keywords: Financial globalization; corporate valuation; financial crisis; climate risks

JEL Classification: F21, F65, G10, G15, G34

Suggested Citation

Stulz, Rene M. and Doidge, Craig and Karolyi, George Andrew, The US Equity Valuation Premium, Globalization, and Climate Change Risks (August 24, 2023). Fisher College of Business Working Paper No. 2023-03-21, Charles A. Dice Working Paper No. 2023-21, Available at SSRN: https://ssrn.com/abstract=4572102 or http://dx.doi.org/10.2139/ssrn.4572102

Rene M. Stulz (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

HOME PAGE: http://www.cob.ohio-state.edu/fin/faculty/stulz

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Craig Doidge

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416-946-8598 (Phone)

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Doidge

George Andrew Karolyi

Cornell University - SC Johnson College of Business ( email )

174A STATLER HALL
ITHACA, NY 14853
United States
6142820229 (Phone)

HOME PAGE: http://https://www.johnson.cornell.edu/faculty-research/faculty/gak56/

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