This study examines the disclosure of labor-related costs by US firms, and estimates the proportion of these costs that are valued as an asset (human capital) by the market. Separate identification of labor-related costs in US financial reports is voluntary, and is made consistently only by about 10% of all US Compustat firms. The probability of disclosure is found to be positively related to firm size, labor intensity and membership in regulated industries and is inversely related to industry concentration.Using a modification of Ohlson's (1995) framework the study finds that on average about 16% of all such costs are valued by the market as an investment in human capital, and that this human capital asset amortizes at a rate of about 34% per year. Further, the human capital asset averages about 5% of the total market value of the firm and accounts for about 16% of the difference between market and book value. The ratio of the human capital asset to market value is found to be positively related to average salary paid to employees, operating uncertainty, and the ratio of labor expenses to sales, but inversely related to the firm's size. Labor Costs and Investments in Human Capital AbstractThis study examines the disclosure of labor-related costs by US firms, and estimates the proportion of these costs that are valued as an asset (human capital) by the market. Separate identification of labor-related costs in US financial reports is voluntary, and is made consistently only by about 10% of all US Compustat firms. The probability of disclosure is found to be positively related to firm size, labor intensity and membership in regulated industries and is inversely related to industry concentration.Using a modification of Ohlson's (1995) framework the study finds that on average about 16% of all such costs are valued by the market as an investment in human capital, and that this human capital asset amortizes at a rate of about 34% per year. Further, the human capital asset averages about 5% of the total market value of the firm and accounts for about 16% of the difference between market and book value. The ratio of the human capital asset to market value is found to be positively related to average salary paid to employees, operating uncertainty, and the ratio of labor expenses to sales, but inversely related to the firm's size. 4

Using a new measure that indirectly captures a firm's restructuring efforts on the basis of changes in its labor and capital expenditure patterns, this study examines the link between restructuring and financial performance for an international sample of firms during the years 1989-1997. Results show that firms that curbed the growth in labor expense intensity (labor expense relative to sales), regardless of the accompanying changes in sales or in capital expenditure intensity, had significantly higher annual returns (despite having "lower" profitability) than firms that expanded their labor intensity. Financial market's response to a reduction in labor expense intensity appears to be more favorable if this reduction is accompanied by a reduction in capital expenditure growth when firms face declining sales, and an increase in capital expenditure growth when firm sales are growing. Copyright Blackwell Publishers Ltd 1999.

No abstract

Drosophila Pumilio (Pum) protein is a translational regulator involved in embryonic patterning and germline development. Recent findings demonstrate that Pum also plays an important role in the nervous system, both at the neuromuscular junction (NMJ) and in long-term memory formation. In neurons, Pum appears to play a role in homeostatic control of excitability via down regulation of para, a voltage gated sodium channel, and may more generally modulate local protein synthesis in neurons via translational repression of eIF-4E. Aside from these, the biologically relevant targets of Pum in the nervous system remain largely unknown. We hypothesized that Pum might play a role in regulating the local translation underlying synapse-specific modifications during memory formation. To identify relevant translational targets, we used an informatics approach to predict Pum targets among mRNAs whose products have synaptic localization. We then used both in vitro binding and two in vivo assays to functionally confirm the fidelity of this informatics screening method. We find that Pum strongly and specifically binds to RNA sequences in the 39UTR of four of the predicted target genes, demonstrating the validity of our method. We then demonstrate that one of these predicted target sequences, in the 39UTR of discs large (dlg1), the Drosophila PSD95 ortholog, can functionally substitute for a canonical NRE (Nanos response element) in vivo in a heterologous functional assay. Finally, we show that the endogenous dlg1 mRNA can be regulated by Pumilio in a neuronal context, the adult mushroom bodies (MB), which is an anatomical site of memory storage.

No abstract