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The Valuation of Organization Capital

Published on Jan 1, 2005
Baruch Lev53
Estimated H-index: 53
,
Suresh Radhakrishnan19
Estimated H-index: 19
Abstract
Baruch Lev* and Suresh Radhakrishnan** Abstract Organization capital, a unique productive resource of the firm is often the most important contributor to corporate performance and growth. This resource, however, is rarely measured internally, nor reported to investors, thereby seriously hampering both managerial resource allocation efforts and investors’ decisions. We develop a firm-specific measure of organization capital and estimate it for a large sample of public companies. We then test the validity of the organization capital measure within a widely used investment valuation model and show that it contributes significantly to the explanation of cross-sectional differences in the market values of firms. Finally, we show that financial analysts, the major information intermediaries in capital markets, do not capture fully the value of organization capital in their widely used forecasts of firms’ earnings.
  • References (21)
  • Citations (79)
References21
Newest
#1Stephen Brown (NU: Northwestern University)H-Index: 31
#2Kin Lo (UBC: University of British Columbia)H-Index: 13
Last.Thomas Lys (NU: Northwestern University)H-Index: 29
view all 3 authors...
#1Philippe Aghion (Harvard University)H-Index: 85
#2Peter Howitt (Brown University)H-Index: 45
#1Erik Brynjolfsson (MIT: Massachusetts Institute of Technology)H-Index: 58
#2Lorin M. Hitt (MIT: Massachusetts Institute of Technology)H-Index: 35
#1Baruch Lev (University of California, Berkeley)H-Index: 53
#2Theodore Sougiannis (UIUC: University of Illinois at Urbana–Champaign)H-Index: 18
Cited By79
Newest
#1Qi Sun (SUFE: Shanghai University of Finance and Economics)H-Index: 1
#2Mindy Zhang Xiaolan (University of Texas at Austin)H-Index: 2
#1Ajantha Velayutham (AUT: Auckland University of Technology)
#2Asheq Rahman (AUT: Auckland University of Technology)H-Index: 3
Last.Asheq Rahman (AUT: Auckland University of Technology)H-Index: 14
view all 3 authors...
#1Woon Sau Leung (Cardiff University)H-Index: 4
#2Khelifa Mazouz (Cardiff University)H-Index: 10
Last.Geoffrey Wood (University of Essex)H-Index: 27
view all 4 authors...
#1Peixin Li (CUFE: Central University of Finance and Economics)
#2Frank Weikai Li (Singapore Management University)H-Index: 2
Last.Zilong Zhang (CityU: City University of Hong Kong)
view all 4 authors...
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