Organization Capital, Labor Market Flexibility, and Stock Returns Around the World

54 Pages Posted: 21 Apr 2015 Last revised: 6 Feb 2018

See all articles by Woon Sau Leung

Woon Sau Leung

The University of Edinburgh Business School, The University of Edinburgh

Khelifa Mazouz

Cardiff University

Jie Chen

Leeds University Business School, University of Leeds

Geoffrey Wood

Western University

Date Written: February 5, 2018

Abstract

Using data from 20 OECD countries, we find that firms with greater organization capital have significantly higher stock returns and that this represents an international phenomenon. We also find new evidence that the positive association between organization capital and stock returns increases with labor market flexibility. This finding is consistent with greater labor mobility and competition in flexible labor markets rendering organization capital investment riskier from the shareholders’ perspective.

Keywords: Organization Capital, Labor Market Flexibility, Intangibles, Stock Returns, Implied Cost of Capital

JEL Classification: G12, G15, K31, L23

Suggested Citation

Leung, Woon Sau and Mazouz, Khelifa and Chen, Jie and Wood, Geoffrey, Organization Capital, Labor Market Flexibility, and Stock Returns Around the World (February 5, 2018). Journal of Banking and Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2596703 or http://dx.doi.org/10.2139/ssrn.2596703

Woon Sau Leung (Contact Author)

The University of Edinburgh Business School, The University of Edinburgh ( email )

29 Buccleuch Pl
Edinburgh, Scotland EH8 9JS
United Kingdom

Khelifa Mazouz

Cardiff University ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom

Jie Chen

Leeds University Business School, University of Leeds ( email )

Leeds LS2 9JT
United Kingdom

HOME PAGE: http://https://business.leeds.ac.uk/about-us/our-people/staff-directory/profile/jie-chen-1/

Geoffrey Wood

Western University ( email )

1151 Richmond St
London, Ontario N6A 3K7
Canada

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