Resilience and Implied Discount Rates

This paper studies the implied rate of return, in particular during COVID-19 to see whether and how it is affected by firms’ resilience. The research investigates the cross-sectional heterogeneity in discount rates based on resilience. Specifically, the novelty of the paper is to provide several definitions of resilience measures to study cross-sectional discount rate and to compare and understand what types of resilience affect firms. Results show to what extent the impact of workplace resilience can be amplified by the financial strength of firms before the onset of COVID-19. The paper proposes a composite-financial resilience index that significantly reveals low-resilience characteristics of firms and resilience heterogeneity in implied discount rates