Impact of Labor and Capital Investment on Investor Idiosyncratic Risk
Shen-Ho Chang end Fu-Cheng Chang
Advances in Management and Applied Economics, 2020, vol. 10, issue 3, 5
Fixed Assets and Human Resources are two factors of production that affects idiosyncratic risk of investors in a business. This research uses the proxy variables of the residual standard deviation. This research is based on the years 2007 to 2017.Â The companies at the over-the-counter market in Taiwan and Black, Jensen & Scholes proposed One Factor Model in 1972. Fama & French proposed a ThreeFactor-Model and Five-Factor-Model in 1993 and 2005. These models tested whether the companyâ€™s investment in fixed assets and human resources will have effects on the idiosyncratic risk of investorsâ€™ investment. The result of the study found two consequences as follows:Â 1. The companyâ€™s investment in fixed assets significantly correlated to investor idiosyncratic risk.Â 2. The companyâ€™s investment in human resources significantly correlated to investor idiosyncratic risk.Â Â JEL classification numbers: M40, M41 Keywords: Idiosyncratic Risk, Human Resources, Fixed Assets
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