Graduation Year

2014

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics-Accounting

Reader 1

Marc Massoud

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Terms of Use for work posted in Scholarship@Claremont.

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© 2014 Malissa M. Gaitan

Abstract

This study examines the relationship between investments in human capital and financial performance among U.S. profit-seeking firms. Specifically, it examines whether companies with greater emphasis in human capital are associated with higher profitability later on. The literature covers material ranging from accumulated information on the economy, organizational psychology, academic papers, national surveys, management literature, and workforce studies. The methodology tests a sample of companies from the Fortune 100’s Best Companies to Work For rank. Using correlations, regression analyses, and an analysis of further tests on Fortune 100 firms, the study provides evidence of a positive relationship between higher rankings and higher accounting ratios of NPM, ROE, and ROA. The paper has implications for managers to use human capital as a profit lever. Proper investments can be made using accounting and finance tools to better assess and invest in their employees.

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