The Measurement of Firm-Specific Organization Capital / Baruch Lev, Suresh Radhakrishnan.

Format:

Book

Author/Creator:

Lev, Baruch.

Contributor:

National Bureau of Economic Research.

Radhakrishnan, Suresh.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9581.

NBER working paper series no. w9581

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

We develop a firm-specific measure of organization capital and estimate it for a sample of approximately 250 companies. We test the validity of the organization capital measure within a widely used investment valuation model and show that our organization capital estimate contributes significantly to the explanation of market values of firms, beyond assets in place and expected abnormal earnings (growth potential). We then examine whether capital markets are efficient with respect to organization capital, namely whether stock prices fully reflect the value of this resource. We find that while investors recognize the importance of organization capital, they do not fully factor its value into equity prices. We ascribe this fault or market inefficiency to poor disclosure of information about intangible capital.

Notes:

Print version record

March 2003.