A DETAILED INVESTIGATION OF THE EFFECTS OF HUMAN CAPITAL ON FIRM VALUE: AN APPLICATION ON BIST

Abstract

We investigate in detail the effects of human capital (HC) on firm value, i.e. the direct, interaction, and lagged effects of HC sub-dimensions (capacity and productivity) on firm market value. We demonstrate that HC capacity and productivity are value-relevant because they affect the decisions of related information users. Specifically, our findings show that Turkish industrial companies that invest in more HC capacity and have higher HC productivity have higher market value. It is also documented that HC productivity moderates the relation between HC capacity and firm value. Lastly, we find that HC sub-dimensions have also lagged effects as well as contemporaneous effects. This research contributes to the knowledge of HC, which is a source of sustained competitive advantage for today's knowledge-based companies in line with the theory of resource-based view.