Human Capital, Management Quality, and the Exit Decisions of Entrepreneurial Firms

Shan He and C. Wei Li

Journal of Financial and Quantitative Analysis, 2016, vol. 51, issue 4, 1269-1295

Abstract: We model the employee incentive problem jointly with a firm’s exit decision. Our model predicts that firms in industries where human capital is important are more likely to go public and use high-powered, stock-based compensation. We also show that the higher the management quality, the more likely a firm is to go public than to be acquired. Regarding life cycle, a firm with high capital intensity and/or high management quality will choose to go public at a younger age.

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jfinqa:v:51:y:2016:i:04:p:1269-1295_00

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