The asset pricing literature has long treated all factors as parallel—inserted into the same linear equation, comparing whose coefficient is larger or more significant. This paper argues that this presumption is wrong and proposes an alternative framework: Factor Hierarchy Theory. Asset pricing factors should be divided into two tiers—regime factors (interest rate spreads) determine "which set of rules currently applies," while market factors (valuation percentiles, momentum) execute pricing under the given rules. Departing from the institutional fact that central banks independently set interest rates under the fiat currency system, this paper derives that the global asset pricing equation necessarily possesses a unified field structure, from which five testable predictions are rigorously deduced. Based on daily data from 15 major global equity markets spanning 2002–2026, employing twelve methods including exhaustive testing, interaction effect testing, Chow tests, and Granger causality tests, the alternative hypotheses of the old theories are systematically eliminated. China's internal spread appears in the optimal exhaustive search combinations of 13/15 markets, the incremental explanatory power of interaction effects is nearly twice that of direct effects, and Chow tests confirm structural breaks in pricing relationships for 13/15 markets. Among all tested hypotheses, only the five predictions of Factor Hierarchy Theory remain uneliminated. The old theories are not overturned—they are precisely reduced in dimensionality. Fama-French is equivalent to the degenerate form of the unified field equation when a single anchor is stable, and ICAPM and portfolio theory are similarly positioned as special cases within specific boundaries. Together with the four preceding papers by Tang (2026a–2026d), this forms a complete research program on the "dual-anchor regime" of global asset pricing, from phenomenon discovery to meta-theoretical construction.
Tang (Wed,) studied this question.