Matching Capital and Labor

Jonathan B. Berk, Jules van Binsbergen and Binying Liu

No 20138, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We establish an important role for the firm by studying capital reallocation decisions of mutual fund firms. At least 30% of the value mutual fund managers add can be attributed to the firm's role in efficiently allocating capital amongst its mutual fund managers. We find no evidence of a similar effect when a firm hires managers from another firm. We conclude that an important reason why firms exist is the private information that derives from the firm's ability to better assess the skill of its own employees.

JEL-codes: D22 G11 G12 G2 G20 G3 G30 J01 J24 L22 L23 L25 (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-bec
Note: AP CF IO
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Citations: View citations in EconPapers (3)

Published as JONATHAN B. BERK & JULES H. van BINSBERGEN & BINYING LIU, 2017. "Matching Capital and Labor," The Journal of Finance, vol 72(6), pages 2467-2504.

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