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The Impact of Investments in Physical Capital, Labor, and Knowledge Capital on Enterprise Market Value: Estimation and Optimization

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  • Yuanbo Qiao

    (Institute for Studies in County Development, Shandong University, Qingdao 266200, China)

  • Xiaoyan Shao

    (Institute for Studies in County Development, Shandong University, Qingdao 266200, China
    Qingdao Jimo District Party School of C.P.C, Qingdao 266200, China)

  • Zhuolin Han

    (School of Economics and Management, Tsinghua University, Beijing 100084, China)

  • Hao Duan

    (Institute for Studies in County Development, Shandong University, Qingdao 266200, China)

Abstract

This study analyzes the market value of listed companies in Mainland China across different industries, including capital-intensive, labor-intensive, technology-intensive, and other industries. A generalized neoclassical investment model that considers physical capital, labor, and knowledge capital as input variables is built to theoretically decompose firm value. The empirical results indicate that knowledge capital accounts for an increasing proportion of the market value of companies, rising sharply from 21.5% in 2009 to 37.9% in 2018. In contrast, the share of labor in enterprise market value has been decreasing year by year, dropping from 56.5% in 2009 to 36.4% in 2018. The share of physical capital in enterprise market value remains relatively stable. Based on these findings, the study simulates the optimal investment behaviors and their influence on the firm value of various types of enterprises, providing valuable insights for investment decision-making for managers in different industries.

Suggested Citation

  • Yuanbo Qiao & Xiaoyan Shao & Zhuolin Han & Hao Duan, 2023. "The Impact of Investments in Physical Capital, Labor, and Knowledge Capital on Enterprise Market Value: Estimation and Optimization," Mathematics, MDPI, vol. 11(18), pages 1-19, September.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:18:p:4016-:d:1244980
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    References listed on IDEAS

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