Productivity, risk, and expected stock returns: In memory of Simon Benninga

Research output: Contribution to journalArticlepeer-review


This study suggests a new measure of productivity for production factors. Adjustment costs for capital-intensive firms are higher than for labor-intensive firms (the differences are systematic). Therefore, higher changes in capital relative to labor will induce higher risk. The capital/labor ratio has been studied extensively. However, the new measure is based on other items, which facilitate the marginal changes in capital and labor, rather than quantities. When the elasticity of capital to labor (ECL) is higher, stock returns are significantly higher as well. This is true both statistically and economically.

Original languageEnglish
Pages (from-to)104-108
Number of pages5
JournalJournal of Corporate Accounting and Finance
Issue number2
StatePublished - Apr 2023


  • asset pricing
  • cross-section returns
  • productivity
  • stock return


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