The Fragility of Organization Capital

Oliver Boguth, David Newton, Mikhail Simutin

Research output: Contribution to journalArticlepeer-review


Firms with high levels of organization capital, a firm-specific production factor provided by key employees, are known to be risky and earn high stock returns. We argue that fragility of organization capital { its sensitivity to potential disruptions { is an independently important dimension of this risk. We proxy for fragility by the size of the top management team and show that firms with small teams outperform firms with big teams by 5% annually. The return spread increases in the level of organization capital and correlates with the outside options of top executives. Further supporting our interpretation, shocks to team composition from unexpected ceo deaths cause larger value losses in smaller teams.

Original languageEnglish (US)
JournalJournal of Financial and Quantitative Analysis
StateAccepted/In press - 2021


  • CEO deaths
  • Organization capital
  • cross-sectional asset pricing
  • executives
  • fragility
  • intangible capital
  • stock returns
  • top management team

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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