Matching Capital and Labor

34 Pages Posted: 23 Mar 2014 Last revised: 23 Dec 2016

Jonathan Berk

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Jules H. van Binsbergen

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Binying Liu

Northwestern University - Kellogg School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: September 19, 2014

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 and the use of that information to efficiently allocate capital to labor.

Keywords: Matching, Capital Allocation, Theory of the Firm

Suggested Citation

Berk, Jonathan and van Binsbergen, Jules H. and Liu, Binying, Matching Capital and Labor (September 19, 2014). Available at SSRN: https://ssrn.com/abstract=2409915 or http://dx.doi.org/10.2139/ssrn.2409915

Jonathan B. Berk

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jules H. Van Binsbergen (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/jules_vanbinsbergen

Binying Liu

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
4084251143 (Phone)

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