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The HRM-Capital-Market Link : effects of securities analysts on strategic human capital
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Krausert, Achim (2018) The HRM-Capital-Market Link : effects of securities analysts on strategic human capital. Human Resource Management, 57 (1). pp. 97-110. doi:10.1002/hrm.21841
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Official URL: https://doi.org/10.1002/hrm.21841
Abstract
This article develops theory about an agency problem affecting the strategic human capital (SHC) of the firm. It proposes three categories of SHC-related choices managers must make that imply a trade-off between near- and long-term performance. Dispersed shareholding, firm coverage by securities analysts, and their practice of publishing quarterly earnings forecasts are argued to entail a bias in management incentives, shifting the balance in this trade-off toward near-term performance. To restore the balance, securities analysts would need to distinguish transitory from recurring effects of SHC-related choices in their valuation models (e.g., treating certain labor cost savings during cyclical downturns as transitory). Restoring the balance would also require them to anticipate long-term effects in their long-term earnings forecasts (e.g., long-term positive effects of retaining employees with valuable skills during cyclical downturns). The article discusses specific transitory cost effects and long-term effects they could potentially take into account. The skills and incentives needed by analysts to account for such effects are argued to vary across firm segments.
| Item Type: | Journal Article | ||||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management |
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| Divisions: | Faculty of Social Sciences > Warwick Business School | ||||||||
| Library of Congress Subject Headings (LCSH): | Human capital , Human capital--Management, Strategic planning, Corporate governance | ||||||||
| Journal or Publication Title: | Human Resource Management | ||||||||
| Publisher: | John Wiley & Sons, Inc. | ||||||||
| ISSN: | 0090-4848 | ||||||||
| Official Date: | January 2018 | ||||||||
| Dates: |
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| Volume: | 57 | ||||||||
| Number: | 1 | ||||||||
| Page Range: | pp. 97-110 | ||||||||
| DOI: | 10.1002/hrm.21841 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Access rights to Published version: | Open Access |
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