The Impact of Investments in Physical Capital, Labor, and Knowledge Capital on Enterprise Market Value: Estimation and Optimization

Abstract

This study analyzes the market value of listed companies in Mainland China across different industries, including capital-intensive, labor-intensive, technology-intensive, and other industries. A generalized neoclassical investment model that considers physical capital, labor, and knowledge capital as input variables is built to theoretically decompose firm value. The empirical results indicate that knowledge capital accounts for an increasing proportion of the market value of companies, rising sharply from 21.5% in 2009 to 37.9% in 2018. In contrast, the share of labor in enterprise market value has been decreasing year by year, dropping from 56.5% in 2009 to 36.4% in 2018. The share of physical capital in enterprise market value remains relatively stable. Based on these findings, the study simulates the optimal investment behaviors and their influence on the firm value of various types of enterprises, providing valuable insights for investment decision-making for managers in different industries.

Keywords

• enterprise market value
• dividend discount model
• knowledge capital
• physical capital
• labor