Star Turnover and the Value of Human Capital: Evidence from Broadway Show

Accepted by Management Science, Forthcoming

42 Pages Posted: 8 Aug 2016 Last revised: 7 Feb 2019

See all articles by Shu Han

Shu Han

Yeshiva University - Syms School of Business

S. Abraham Ravid

Yeshiva University - Syms School of Business

Date Written: July 1, 2018

Abstract

Theater shows routinely turn-over actors in lead roles. Otherwise the show stays the same, including the director, the script, other actors and the physical theater environment. Even the lines uttered do not change. Therefore, the theater provides a unique laboratory for assessing the value of human capital to an enterprise, a question that has been studied in other contexts including the CEO value literature. We compare revenues, capacity and ticket prices just before and just after transitions of top cast members. We also characterize the performers in various ways, control for the attributes of the show, and for team characteristics. We find that decorated theater stars significantly affect the financial success of theater shows, supporting the MacDonald (1988) version of the superstar hypothesis. Movie stars and celebrities do not seem to affect ticket prices or show revenues. Teams and seasonal effects seem to matter as well.

Keywords: value of human capital; stars; theater

JEL Classification: G32, J24, L82, M12

Suggested Citation

Han, Shu and Ravid, S. Abraham, Star Turnover and the Value of Human Capital: Evidence from Broadway Show (July 1, 2018). Accepted by Management Science, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2819247 or http://dx.doi.org/10.2139/ssrn.2819247

Shu Han

Yeshiva University - Syms School of Business ( email )

United States

S. Abraham Ravid (Contact Author)

Yeshiva University - Syms School of Business ( email )

United States

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