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The present value relation over six centuries: The case of the Bazacle company

David le Bris, William N. Goetzmann and Sébastien Pouget

Journal of Financial Economics, 2019, vol. 132, issue 1, 248-265

Abstract: We study asset pricing over the longue durée using share prices and net dividends from the Bazacle company of Toulouse, the earliest documented shareholding corporation. The data extend from the firm’s foundation in 1372 to its nationalization in 1946. We find an average dividend yield of 5% per annum and near-zero long-term, real capital appreciation. Stationary dividends and stock prices enable us to directly study how prices relate to expected cash flows, without relying on a rate of return transformation. A reduced-form asset pricing model with persistent dividends and a time-varying risk correction is not rejected by the data.

Keywords: Asset pricing; History of finance; Present value tests (search for similar items in EconPapers)
JEL-codes: G12 N23 (search for similar items in EconPapers)
Date: 2019
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