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Labor and the Market Value of the Firm

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dc.creator Merz, Monika
dc.creator Yashiv, Eran
dc.date 2003
dc.date.accessioned 2013-10-16T07:09:19Z
dc.date.available 2013-10-16T07:09:19Z
dc.date.issued 2013-10-16
dc.identifier http://hdl.handle.net/10419/20201
dc.identifier ppn:377465968
dc.identifier.uri http://koha.mediu.edu.my:8181/xmlui/handle/10419/20201
dc.description What role does labor play in firms? market value? We explore this question using a production-based asset pricing model with frictions in the adjustment of both capital and labor. We posit that hiring of labor is akin to investment in capital and that the two interact, with the interaction being a crucial determinant of market value behavior. We use aggregate U.S. corporate sector data to estimate firms? optimal hiring and investment decisions and the consequences for firms? value. We then decompose this value, thereby quantifying the link between firms? market value and gross hiring flows, employment, gross investment and physical capital. We find that a conventional specification – quadratic adjustment costs for capital and no hiring costs – performs poorly. Rather hiring and investment flows, unlike employment and capital stocks, are volatile and both are essential to account for market volatility. A key result is that firms? value embodies the value of hiring and investment over and above the capital stock.
dc.language eng
dc.relation IZA Discussion paper series 965
dc.rights http://www.econstor.eu/dspace/Nutzungsbedingungen
dc.subject E24
dc.subject E23
dc.subject E22
dc.subject G12
dc.subject ddc:330
dc.subject production-based asset pricing
dc.subject labor market frictions
dc.subject gross flows
dc.subject Q-model
dc.subject GMM
dc.subject Unternehmenswert
dc.subject Personalbeschaffung
dc.subject Investition
dc.subject Tobin's q
dc.subject Capital Asset Pricing Model
dc.subject Marktwert
dc.subject Schätzung
dc.subject Theorie
dc.subject Vereinigte Staaten
dc.title Labor and the Market Value of the Firm
dc.type doc-type:workingPaper
dc.coverage 1976-1997

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