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Human Capital Specificity and Corporate Capital Structure

dc.contributor.advisor Graham, John R. Kim, Hyunseob 2012-05-25T20:09:20Z 2012-05-25T20:09:20Z 2012
dc.description.abstract <p>I examine how employing workers with specific human capital affects capital structure decisions by employers. Based on plant-level data from the U.S. Census Bureau, I use the opening of new plants as an exogenous reduction in human capital specificity-- the inability to transfer specific skill sets across employers--for incumbent workers in a local labor market. My results indicate that the opening of a new manufacturing plant in a given county leads to a 2.6-3.9% increase in the leverage of existing manufacturing firms in the county, relative to the leverage of manufacturing firms in an otherwise comparable county. Moreover, plant openings have a larger impact on firms that are more likely to share labor with the new plant, that have high labor intensity, and that have high marginal tax benefits of debt. Alternative explanations concerning productivity spillovers, product market competition, and county-wide shocks do not appear to account for the results. I find consistent evidence in a separate sample that contains a broad panel of firms. Overall, these results suggest that human capital specificity raises the cost of debt and thus decreases optimal leverage.</p>
dc.subject Finance
dc.subject Economics, Labor
dc.subject Economics
dc.subject Asset Specificity
dc.subject Capital Structure
dc.subject Cost of Debt
dc.subject Human Capital
dc.subject Local Labor Market
dc.subject Natural Experiment
dc.title Human Capital Specificity and Corporate Capital Structure
dc.type Dissertation
dc.department Business Administration

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