Since firms time equity net issuance based on perceived misvaluation of their shares, these actions reveal their net present value calculations and perceived cost of equity. Building on this insight, we propose a test to identify the asset pricing model that best aligns with firms’ perceived cost of equity. We find that a basic risk model such as the CAPM explains net issuance decisions better than the naive "excess market" model or market multiples. Our findings suggest that firms understand and account for basic notions of risk when making actual financing decisions.