model with heterogeneous agents, we reveal the existence of an extreme weather risk premium in the cross-section of stock … risk factors from standard asset pricing models nor by firm characteristics. Our results reveal a novel link between … climate risk and firm value. …

-traded food companies, we rank these countries each year based on their long-term trends toward droughts using the Palmer Drought …

, measured by the Palmer Drought Severity Index (PDSI) from climate studies, forecasts both declines in profitability ratios and … drought, the most damaging natural disaster for crops and food-company cash flows. We show that prolonged drought in a country … poor stock returns for food companies in that country. A portfolio short food stocks of countries in drought and long those …

, measured by the Palmer Drought Severity Index (PDSI) from climate studies, forecasts both declines in profitability ratios and … drought, the most damaging natural disaster for crops and food-company cash flows. We show that prolonged drought in a country … poor stock returns for food companies in that country. A portfolio short food stocks of countries in drought and long those …