Journal of Financial Economics Vol. 143 No. 2 2022
Decomposing firm value
Abstract
What are the economic determinants of a firm’s market value? We answer this question through the lens of a generalized neoclassical model of investment with quasi-fixed labor and three heterogeneous capital inputs. We estimate the structural model using firm-level data on US firms and find that, on average and depending on the industry, installed labor force accounts for 14–21% of firms’ market value, physical capital accounts for 30–40%, knowledge capital accounts for 20–43%, and brand capital accounts for 6–25%. Our analysis provides direct empirical evidence for the importance of labor and intangible capital inputs for understanding firm value.
- DOI
- 10.1016/j.jfineco.2021.08.007
- Volume
- 143
- Issue
- 2
- Pages
- 619-639
- Language
- en
- Sources
- crossref bibtex:phds-export.bib openalex