Affiliation:
1. King’s University College at Western University London, Ontario, Canada
Abstract
This study examines how capital age affects the efficiency of corporate labor investments. Using a sample of 1,588 US firms from 1991 to 2016, we find that the efficiency of labor investments increases as technology ages. Subsample analysis on labor investment efficiency suggests that old capital decreases labor over- and underinvestment. Our results remain robust to alternative specifications and restricted to small firms and industries requiring high labor skills. These findings add to the growing literature examining how learning affects a variety of phenomena in finance. Managers' increased understanding of their capital over time facilitates the efficiency of corporate labor investments.
Publisher
University of New Haven - College of Business
Subject
Marketing,Organizational Behavior and Human Resource Management,Strategy and Management,Business, Management and Accounting (miscellaneous)