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Long-Term Attachments and Long-Run Firm Rates of Return

Author

Listed:
  • Peter F. Orazem

    () (Department of Economics, 267 Heady Hall, Iowa State University)

  • Marvin L. Bouillon

    (Department of Accounting, Iowa State University)

  • Benjamin M. Doran

    (Department of Accounting, Iowa State University)

Abstract

Long-term attachments between workers and firms are common. Numerous studies have examined worker returns to tenure, but little is known of firm returns to firm–worker matches. Yet these attachments represent a human capital asset quasi-held by the firm, which is not captured by traditional accounting measures of firm assets. Firms with large quasi-holdings of human capital will have higher measured return on assets, other things equal. Analysis of data on 250 large manufacturing firms supports the view that firms profit from long-term attachments with their workers. Consequently, unmeasured human capital assets contribute to the explanation of persistence in measured long-run excess profits across firms.

Suggested Citation

  • Peter F. Orazem & Marvin L. Bouillon & Benjamin M. Doran, 2004. "Long-Term Attachments and Long-Run Firm Rates of Return," Southern Economic Journal, Southern Economic Association, vol. 71(2), pages 314-333, October.
  • Handle: RePEc:sej:ancoec:v:71:2:y:2004:p:314-333
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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