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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27573
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| Title: | Labor Costs and Investments in Human Capital |
| Authors: | Ballester, Marta
Livnat, Joshua
Sinha, Nishi |
| Issue Date: | Nov-1999 |
| Series/Report no.: | Joshua Livnat-02 |
| Abstract: | This study examines the disclosure of labor-related costs by US firms,
and estimates the proportion of these costs that are valued as an asset
(human capital) by the market. Separate identification of labor-related
costs in US financial reports is voluntary, and is made consistently
only by about 10% of all US Compustat firms. The probability of
disclosure is found to be positively related to firm size, labor
intensity and membership in regulated industries and is inversely
related to industry concentration. Using a modification of Ohlson's
(1995) framework the study finds that on average about 16% of all such
costs are valued by the market as an investment in human capital, and
that this human capital asset amortizes at a rate of about 34% per year.
Further, the human capital asset averages about 5% of the total market
value of the firm and accounts for about 16% of the difference between
market and book value. The ratio of the human capital asset to market
value is found to be positively related to average salary paid to
employees, operating uncertainty, and the ratio of labor expenses to
sales, but inversely related to the firm’s size. |
| URI: | http://hdl.handle.net/2451/27573 |
| Appears in Collections: | Accounting Working Papers
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