Health Capital, Firm Investment, and Shareholder Value
Sara B. Holland
University of Georgia - C. Herman and Mary Virginia Terry College of Business
June 13, 2012
In 2005, U.S. employers spent more than $500 billion on health insurance. I show how a firm's health capital investment depends on human capital, labor productivity, and firm size. Firms mitigate depreciation in human capital by investing in health to increase the productivity of human and physical capital. Using firm-level health insurance data, I find firms that have higher labor productivity and spend more on research and development invest more in health capital. Health capital investment positively affects firm value. To identify this effect, I instrument for insurance with state mandates and the number of persons covered by insurance contracts.
Number of Pages in PDF File: 41
Date posted: September 9, 2010 ; Last revised: June 14, 2012
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