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We examine how a firm's brand capital – a primary form of intangible capital – affects its labor investment efficiency. Using a sample of 15,698 firm-year observations from 1990 to 2024, we find that firms with higher brand capital demonstrate more efficient labor investment. Moreover, this relationship is partly explained by the external monitoring channel. Using difference-in-differences tests with the 1996 Federal Trademark Dilution Act as an exogenous variation in brand capital, we provide strong evidence for the positive association between brand capital and labor investment efficiency.
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Chowdhury et al. (2026) studied this question.
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