Associate professor of finance Andrea Eisfeldt of the UCLA Anderson School of Management and co-author Dimitris Papanikolaouk of the Kellogg School of Management have received the 2013 Smith Breeden Prize for the best paper published in the Journal of Finance. This marks the second time Eisfeldt’s work has been recognized by the American Finance Association; she won the Smith Breeden Prize for the paper "Endogenous Liquidity in Asset Markets" in 2004.
In "Organization Capital and the Cross-section of Expected Returns," Eisfeldt and Papanikolaou developed a model that analyzes the effect of organization capital on asset prices. They argue that "shareholders consider firms with high levels of organization capital to be riskier than firms with more physical capital." Organization capital constitutes the firm’s know-how; the labor-related knowledge, talent, and processes that make the firm productive. This know-how resides in the firm’s key talent, an asset that "walks out the door at the end of every day.’’ The study is the first to measure how the value of organization capital manifests in a market sense.
The implication of the research is significant as the companies of the future, such as those in the technology space, will only see their levels of organizational capital increase.
This story is adapted from a longer article on the UCLA Anderson blog.
In "Organization Capital and the Cross-section of Expected Returns," Eisfeldt and Papanikolaou developed a model that analyzes the effect of organization capital on asset prices. They argue that "shareholders consider firms with high levels of organization capital to be riskier than firms with more physical capital." Organization capital constitutes the firm’s know-how; the labor-related knowledge, talent, and processes that make the firm productive. This know-how resides in the firm’s key talent, an asset that "walks out the door at the end of every day.’’ The study is the first to measure how the value of organization capital manifests in a market sense.
The implication of the research is significant as the companies of the future, such as those in the technology space, will only see their levels of organizational capital increase.
This story is adapted from a longer article on the UCLA Anderson blog.
