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Organization Capital

Author

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  • BARUCH LEV
  • SURESH RADHAKRISHNAN
  • WEINING ZHANG

Abstract

We develop a firm‐specific measure of the most important intangible asset—organization capital—and document that organization capital is associated with five years of future operating and stock return performance, after controlling for other factors. Thus, our organization capital measure captures firms' fundamental ability to generate abnormal performance. We also find that executive compensation is positively associated with our measure of organization capital, showing that the measure indeed reflects managerial ability.

Suggested Citation

  • Baruch Lev & Suresh Radhakrishnan & Weining Zhang, 2009. "Organization Capital," Abacus, Accounting Foundation, University of Sydney, vol. 45(3), pages 275-298, September.
    • Handle: RePEc:bla:abacus:v:45:y:2009:i:3:p:275-298
    DOI: 10.1111/j.1467-6281.2009.00289.x
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