Organizational capital and firm risk – Testing the outside option

Douglas O. Cook and M. Tony Via

Finance Research Letters, 2023, vol. 51, issue C

Abstract: We examine organizational capital risk on a micro level by identifying 120,017 quasi-voluntary inventor moves between firms over three decades. Consistent with survey results from Eisfeldt and Papanikolaou (2013), we find that a 10% increase in organizational capital results in a 1.8% greater annual exit of firm inventors. Exit risk is higher 1) where employees are more transferable between firms and 2) among financially constrained firms that cannot compensate valuable employees competitively. Valuations are lower for firms with greater levels of inventor turnover / outflows.

Keywords: Labor mobility; Organizational capital; Firm risk (search for similar items in EconPapers)
JEL-codes: G12 J24 J31 J62 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322005232

DOI: 10.1016/j.frl.2022.103344

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