Premium
Human Capital and Stock Returns: Is the Value Premium an Approximation for Return on Human Capital?
Author(s) -
Hansson Bo
Publication year - 2004
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.0306-686x.2004.00542.x
Subject(s) - economics , human capital , growth stock , labour economics , economic rent , stock (firearms) , wage growth , wage , physical capital , monetary economics , stock market , microeconomics , restricted stock , market economy , mechanical engineering , paleontology , horse , engineering , biology
This study, using a direct measure of the wage growth rate within firms, examines the value premium in relation to human capital. The results suggest that the dispersion in wage growth in value and growth stocks explains a large portion of the differences in stock returns. It appears that value stocks are less exposed to shocks in rents to human capital. Differences in labor force characteristics among value and growth stocks also proved to be an important factor in determining both the impact of future changes in labor income growth rate and firm value. The present findings are understood to mean that the ability of investors to forecast the dispersion in wage growth in firms is limited.