Abstract

http://ssrn.com/abstract=1962910
 
 

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Key Human Capital


Ryan D. Israelsen


Indiana University - Kelley School of Business - Department of Finance

Scott E. Yonker


Indiana University - Kelley School of Business - Department of Finance; Cornell University

October 28, 2014


Abstract:     
Firms whose human capital is concentrated in a few irreplaceable employees lack diversification in their human capital stock, exposing them to key human capital risk. Using "key man life insurance" disclosures to measure this risk, we show that exposed firms are riskier. These younger, smaller, growth firms have abnormally high volatility and following announcement of key employee departures, the most exposed firms lose 8% of their value. Key employees tend to be highly educated. They are four times more likely to hold Ph.D.'s than top managers, and firms with key human capital are more innovative.

Number of Pages in PDF File: 63

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

JEL Classification: G32, J24, O31, O32

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Date posted: November 23, 2011 ; Last revised: October 29, 2014

Suggested Citation

Israelsen, Ryan D. and Yonker, Scott E., Key Human Capital (October 28, 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 - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States

Scott E. Yonker
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States

Cornell University ( email )
Ithaca, NY 14853
United States

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