Dr. S. Ravid Abraham Dr. Shu HanDr. S. Abraham Ravid, professor of finance and chair of the finance department at Sy Syms School of Business, and Dr. Shu Han, associate professor of management information systems, have had an article accepted for publication in Management Science titled “Star Turnover and the Value of Human Capital: Evidence from Broadway Show.”

As Dr. Ravid explains, “Because theater shows routinely turn over actors in lead roles, the theater provides a unique laboratory for assessing the value of human capital to an enterprise.” What makes this study important, as he explained, is that trying to measure the value of human capital is extremely difficult because most organizations are complex with many things going on at the same time and many moving parts, making it hard to distill the value of any individual.

However, the theater provides a unique laboratory in the sense that when actors are replaced and nothing else changes (e.g., lines in the script, the director, other actors, the physical theater environment), it makes it possible to isolate the value that individuals bring to the enterprise.

He and Dr. Han compared revenues, capacity and ticket prices just before and just after transitions of top cast members. They also wanted to examine the assumption by theaters that movie stars and celebrities will attract audiences.

“We found,” he explained, “that decorated theater stars significantly affect the financial success of theater shows. Movie stars and celebrities do not seem to affect ticket prices or show revenues.” The ability to find the value added by the right people in theater shows, they believe, should also be applicable to people in other organizations, though they acknowledge that the mixed results of previous efforts to do this may be complicated by the complexity of organizations and the lack of a clean experiment.

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