TY  - JOUR
AU  - Lev,Baruch
AU  - Radhakrishnan,Suresh
TI  - The Measurement of Firm-Specific Organization Capital
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9581
PY  - 2003
Y2  - March 2003
UR  - http://www.nber.org/papers/w9581
L1  - http://www.nber.org/papers/w9581.pdf
N1  - Author contact info:
Baruch Lev
New York University
E-Mail: blev@stern.nyu.edu
AB  - We develop a firm-specific measure of organization capital and estimate it for a sample of approximately 250 companies. We test the validity of the organization capital measure within a widely used investment valuation model and show that our organization capital estimate contributes significantly to the explanation of market values of firms, beyond assets in place and expected abnormal earnings (growth potential). We then examine whether capital markets are efficient with respect to organization capital, namely whether stock prices fully reflect the value of this resource. We find that while investors recognize the importance of organization capital, they do not fully factor its value into equity prices. We ascribe this fault or market inefficiency to poor disclosure of information about intangible capital.
ER  -