Abstract

http://ssrn.com/abstract=1962910
 
 

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Key Human Capital


Ryan D. Israelsen


Indiana University - Department of Finance

Scott E. Yonker


Indiana University Bloomington - Department of Finance

March 19, 2014


Abstract:     
Firms whose human capital is concentrated in a few irreplaceable key employees lack diversification in their human capital, exposing them to key human capital risk. Using "key man life insurance" disclosures to measure this risk, we show that exposed firms are more risky. These firms are younger, smaller, growth firms with low asset tangibility and their key employees are four times more likely than CEOs to have Ph.D's. They have abnormally high volatility and following announcements of key employee departures, the most exposed firms lose 8% of their value. Firms with the greatest key human capital risk earn abnormal relative returns.

Number of Pages in PDF File: 49

Keywords: human capital, risk, key employees, life insurance, disclosure

JEL Classification: G32, J24

working papers series


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Date posted: November 23, 2011 ; Last revised: March 20, 2014

Suggested Citation

Israelsen, Ryan D. and Yonker, Scott E., Key Human Capital (March 19, 2014). Available at SSRN: http://ssrn.com/abstract=1962910 or http://dx.doi.org/10.2139/ssrn.1962910

Contact Information

Ryan D. Israelsen (Contact Author)
Indiana University - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
Scott E. Yonker
Indiana University Bloomington - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
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