Neng Wang is Dean’s Distinguished Chair Professor of Finance and Senior Associate Dean at CKGSB. Prior to joining CKGSB, he was Chong Khoon Lin Professor of Real Estate and Finance at Columbia Business School since 2007. He is also a Research Associate (Senior Research Fellow) at the National Bureau of Economic Research (NBER) and a Senior Research Fellow at Asian Bureau of Financial and Economics Research (ABFER). He has widely published in leading economics, finance, and business journals. His research interests include corporate finance, contract theory, financial institutions, asset pricing, asset allocation, sovereign debt and international finance, risk management, entrepreneurial finance, household finance, wealth distribution, macroeconomics, private equity, hedge funds, investor protection, real estate finance, FinTech, and the Chinese economy.
Webiste: https://english.ckgsb.edu.cn/faculty/neng-wang/
Paper: https://www.nber.org/papers/w27218
Abstract:
We develop a model of pandemic risk management and firm valuation. We introduce aggregate transmission shocks into an epidemic model and link valuations to infections via an asset-pricing framework with vaccines. Infections lower earnings growth but firms can mitigate damages. We estimate a large reproduction number R0 and transmission volatility for COVID-19. Using these estimates, we assess the accuracy of deterministic approximations based on R0. Our model generates predictions consistent with data: unexpected infection resurgence, non-monotonic mitigation policies, and higher price-to-earnings ratios during a pandemic. Valuations would be significantly lower absent mitigation and a high vaccine arrival rate.
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