---
title: The Innovator's Risk Premium: Sticky Hurdle Rates, the Cost of Capital, and Creative Destruction
url: https://www.ml-quant.com/papers/repec/bde-wpaper-2628e/
site: ML-Quant (https://www.ml-quant.com)
updated: 2026-10-02
license: Summaries CC BY 4.0; links go to the original sources
index: https://www.ml-quant.com/llms.txt
identifier: RePEc:bde:wpaper:2628e
source_url: https://econpapers.repec.org/RePEc:bde:wpaper:2628e
featured: 2026-10-02
citations: unknown
topic: Asset Pricing & Factors
---


# The Innovator's Risk Premium: Sticky Hurdle Rates, the Cost of Capital, and Creative Destruction

The research shows that firms' hurdle rates exceed their financial cost of capital due to innovation risk and imperfect pledgeability, explaining weak productivity growth and declining business dynamism.

- Source: https://econpapers.repec.org/RePEc:bde:wpaper:2628e
- Identifier: RePEc:bde:wpaper:2628e
- Released: 2026-10-02
- First featured: Quant Letter No. 133 (2026-10-02): https://www.ml-quant.com/issues/2026-10-02/
- Citations (Semantic Scholar): not tracked
- Published in: not yet
- Topic: Asset Pricing & Factors
- Authors: Craig A. Chikis, Jonathan Goldberg, David López-Salido

## Related

- [Interpretable Machine Learning for Asset Pricing](https://www.ml-quant.com/papers/ssrn/4473746/): The paper utilizes deep neural networks to more accurately estimate equity risk premia over time, enhancing the interpretability of machine learning in economics.
- [The Cross-Section of Factor Returns](https://www.ml-quant.com/papers/ssrn/4441376/): Most of the 150 equity factors examined show positive returns but fail to deliver excess returns after accounting for risk, especially in downturns.
- [Are Penalty Shootouts Better Than a Coin Toss? Evidence From International Club Football in Europe](https://www.ml-quant.com/papers/arxiv/2510.17641/): Using UEFA penalty shootout data (2000–2025) we find outcomes are essentially random—no measurable advantage from kicking order, venue, momentum, or team strength.
- [Optimal Investment and Consumption in a Stochastic Factor Model](https://www.ml-quant.com/papers/arxiv/2509.09452/): The article discusses optimal investment and consumption in an incomplete stochastic factor model, offering a comprehensive characterization of the problem's well-posedness and an efficient numerical algorithm for computing the value function.
- [Model complexity and the performance of global versus regional models](https://www.ml-quant.com/papers/ssrn/5241880/): Complex algorithms in global models outperform regional models in cross-sectional asset pricing, contradicting previous studies favoring regional methods.
- [How Election Shocks Impact Markets: Evidence from Sectoral Stock Prices](https://www.ml-quant.com/papers/arxiv/2504.02731/): Research indicates U.S. presidential election cycles impact sectoral stock markets, with candidate preferences influencing asset prices in energy, defense, and clean energy sectors.