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Employee education level and the cost of equity capital

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  • Wang, Ziyue
  • Yuan, Zhizhu

Abstract

This study examines the capital market benefits of employee education level and finds a significant and negative relation between a firm's employee education level and cost of equity capital. Our empirical results remain unchanged after applying different measures of variables and addressing endogeneity concerns. Cross-sectional tests show that our main results are more pronounced in firms which treat employees better and in knowledge-intensive firms. Overall, this study presents novel evidence on how human capital creates value for firms and enriches the literature on the cost of equity capital.

Suggested Citation

  • Wang, Ziyue & Yuan, Zhizhu, 2024. "Employee education level and the cost of equity capital," Finance Research Letters, Elsevier, vol. 62(PA).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324002113
    DOI: 10.1016/j.frl.2024.105181
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