Volume 17, Numbers 3 & 4 / September/December , Pages 149-369
International Evidence on the Equity Premium Puzzle and Time Discounting
Multinational Finance Journal, 2013, vol. 17, no. 3/4, pp. 149-163
Marc Oliver Rieger , University of Trier, Germany    Corresponding Author
Thorsten Hens , University of Zurich, Switzerland
Mei Wang , WHU Otto Beisheim school of Economics, Germany

Abstract:
We examine time discounting factors in an international survey. Our analysis reveals a significant relationship between time discount factors and historical equity premiums across 27 countries. This result implies that higher historical equity risk premiums are observed in countries where survey participants tend to be more short-term oriented. This finding is consistent with the explanation of the equity premium puzzle provided by myopic loss aversion.

Keywords : equity risk premium; time discounting; myopic loss aversion; cultural finance
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