Employee education level and the cost of equity capital

Ziyue Wang and Zhizhu Yuan

Finance Research Letters, 2024, vol. 62, issue PA

Abstract: This study examines the capital market benefits of employee education level and finds a significant and negative relation between a firm's employee education level and cost of equity capital. Our empirical results remain unchanged after applying different measures of variables and addressing endogeneity concerns. Cross-sectional tests show that our main results are more pronounced in firms which treat employees better and in knowledge-intensive firms. Overall, this study presents novel evidence on how human capital creates value for firms and enriches the literature on the cost of equity capital.

Keywords: Employee education level; Cost of equity capital; Human capital; Employee treatment policy (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324002113

DOI: 10.1016/j.frl.2024.105181

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