Abstract
Is human capital an asset? We empirically address this question using the accounting concept of assets - costs should be capitalized as assets if they are expected to generate future measurable benefits with reasonable certainty. Also, holding the investment opportunity set constant, disposal of these assets should lead to a reduction in future benefits. The analysis concentrates on the UK football industry, as it represents a case where human capital is highly significant, data on investment in human capital is available, and where investment in human capital is significant due to restrictions on labor mobility. Using a sample of 58 football clubs during 1990-2000, we examine the relation between measures of benefits that accrue to the firm on one hand and current and lagged transfer fees paid for new players and transfer fees received from selling players on the other hand. Results suggest that certain measures of future benefits are positively (negatively) associated with current and lagged transfer fees paid (received). That is, investing in human capital is capable of increasing future benefits and selling it may reduce them. Also, regression analysis demonstrates that the explanatory power of old investments is lower than that of more recent ones, consistent with the notion of amortization. Additional tests demonstrate the reliability of future sales but indicate uncertainty of other future benefits. Market values are positively (negatively) associated with transfer fees paid (received), suggesting that equity investors, on average, associate investments in players' contracts with future benefits.
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