Human and Intellectual Capital Spending Efficiency and Efficacy: Evidence from U.S. Universities

Christopher S. Armstrong, Alan D. Jagolinzer, Sarah Kröchert and Andrea Pawliczek

Journal of Business Finance & Accounting, 2026, vol. 53, issue 2, 970-997

Abstract: We analyze the efficiency and efficacy of human and intellectual capital investment to better understand the effects of social investment. Existing literature in the corporate setting lacks analysis on the impact of human and intellectual capital investment, likely due to data scarcity. We use universities as our research setting because they regularly report standardized data, have similarities with for‐profit corporations in terms of size and oversight, and directly support corporate ESG initiatives related to workforce diversity. We find that (1) private donations and government grants increase in human and intellectual capital spending efficiency, (2) graduation rates of underrepresented students are higher at universities with more efficient spending for the lower quantiles of the graduation rate distribution, and (3) post‐graduate income is higher for students from the lower parental income quintiles at universities with higher spending efficiency. Collectively, our evidence suggests that more efficient investment in human and intellectual capital can generate improvements in core ESG outcomes.

Date: 2026
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