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Selection versus Talent Effects on Firm Value / Briana Chang, Harrison Hong.
- Format:
- Book
- Author/Creator:
- Chang, Briana.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w24672.
- NBER working paper series no. w24672
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- Measuring the value of labor-market hires for stock prices, be it underwriters when firms go public (IPOs) or chief executive officers (CEOs), is difficult due to selection. Opaque firms with higher costs of capital benefit more from prestigious underwriters, while productive firms benefit more from talented CEOs. Using assignment models, we show that the importance of talent (or agent heterogeneity) relative to selection (or firm heterogeneity) is measured by wage increases across agents of different compensation ranks divided by changes in output across their firms. The median of this ratio is 0.5% for underwriters and 2% for CEOs.
- Notes:
- Print version record
- May 2018.
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