The Valuation of Organization Capital

Baruch Lev and Suresh Radhakrishnan

in Measuring Capital in the New Economy

Published by University of Chicago Press

Published in print October 2005 | ISBN: 9780226116129
Published online February 2013 | e-ISBN: 9780226116174 | DOI:
The Valuation of Organization Capital

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This chapter describes a firm-specific measure of organization capital and applies it to produce estimate for a large sample of publicly traded companies. It explains that this measure involves the measure organizational capital as a residual, much like total factor productivity. This chapter also evaluates the validity of this measure within a widely used investment valuation model and shows that it can contribute significantly to the explanation of differences in market values of firms, beyond the traditional value indicators of assets in place and expected abnormal earnings.

Keywords: organization capital; publicly traded capital; factor productivity; investment valuation model; market values; expected abnormal earnings

Chapter.  16064 words.  Illustrated.

Subjects: Econometrics and Mathematical Economics

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