Abstract: Abstract We estimate the value of intangible capital across 77 countries through the valuation approach of a neoclassical model of investment with two heterogeneous types of capital inputs: physical capital and intangible capital. Using data on public listed firms across the world, we infer the importance of intangible capital for the firm's market value in each country. Our results show that intangible capital is crucial for the model's success in capturing the variation in firm's market value across all economies. We find that intangible capital on average accounts for over half of the market value of firms in all countries, with significant cross country heterogeneity. Furthermore, firms with a larger share of their value driven by intangible capital have higher expected equity returns than firms with a lower share. The relative return of intangible capital to physical capital across the globe helps describe the common risk for investors across countries.
Abstract: Using natural language processing techniques and millions of anonymous employee reviews, I propose a novel measure of workplace harassment in U.S. firms and investigate its causal effects on innovation and other firm-level outcomes. I exploit the quasi-experimental reduction in workplace harassment caused by changes in non-disclosure agreement (NDA) laws across U.S. states and document a negative impact of workplace harassment on innovation. Firms with previously higher levels of workplace harassment experience a significant increase in their innovation output following these regulations. The documented effect is significantly more pronounced for firms with minority representation in their inventor teams along the gender, race, and ethnicity dimensions. Underlying these effects are improvements in team capital and collaborative dynamics, as the positive changes in the workplace climate lead to significant increases in inventor productivity, as well as retention and entry rates of skilled workers.
Abstract: We study the composition of a firm’s innovation portfolio by machine-reading 90 million patent claims. Process patents and their share in a firm’s portfolio are valued differently by the focal firm versus potential acquirers. They are more cost-savings- oriented and they are more internal-knowledge-oriented (i.e., firm-specific). Process- orientation in patenting reduces the likelihood of being targeted for mergers. However, this effect is offset when there is a stronger overlap between the product portfolios of the target and the potential bidder. The positive influence of emphasized process- innovation on mergers, when there is horizontal relatedness between the two firms, is both new and in direct contrast to prior literature inferences. It also increases measures of combined merger value. We conclude that the firm-specificity aspect of process innovation is both understood and priced in the market for corporate control.
