The Causal Relationship between Human Capital & Stock Performance: A quantitative study on the Stockholm Stock Exchange
Independent thesis Advanced level (degree of Master (Two Years)), 10 credits / 15 HE creditsStudent thesis
For investors to be able to take rational and correct investment decisions it is important that they can value companies in a reliable way. Financial statements exclude valuable intangible assets, like human capital, and some actors may be able to take advantage of this if they have more information about companies’ human capital investments than the rest of the market. In the modern economy it is human capital and knowledge within companies that mainly create competitive advantages and increased business performance, not physical assets.
The purpose of the study is to examine how investments in human capital by Swedish companies affect their stock performance. If there is a causal relationship the purpose is also to describe this relation, and if it is possible for investors to gain abnormal return by using information about companies´ human capital as an investment strategy. The purpose of the study is reached by studying 220 public companies on the Swedish stock market between the years 2009-2013.The study is conducted with a quantitative method with a deductive approach based on positivism.
The study presents several of relevant theories and previous studies in the field to build an understanding that can explain the causal relationship between human capital and stock performance. Based on theories, hypotheses have been generated and tested with multiple regression analyses.
The result is analyzed and compared with previous research and theories. The study finds evidence for a positive causal relationship between companies´ human capital investments and stock performance. That is an indication that investors can gain abnormal returns by basing their investment decisions on information about companies’ human capital.
Place, publisher, year, edition, pages
2015. , 76 p.
Human capital, stock performance, resource-based theory, information asymmetry, market efficiency, financial performance.
IdentifiersURN: urn:nbn:se:umu:diva-105703OAI: oai:DiVA.org:umu-105703DiVA: diva2:827710