Star Turnover and the Value of Human Capital: Evidence from Broadway Show
Accepted by Management Science, Forthcoming
42 Pages Posted: 8 Aug 2016 Last revised: 7 Feb 2019
Date Written: July 1, 2018
Abstract
Theater shows routinely turn-over actors in lead roles. Otherwise the show stays the same, including the director, the script, other actors and the physical theater environment. Even the lines uttered do not change. Therefore, the theater provides a unique laboratory for assessing the value of human capital to an enterprise, a question that has been studied in other contexts including the CEO value literature. We compare revenues, capacity and ticket prices just before and just after transitions of top cast members. We also characterize the performers in various ways, control for the attributes of the show, and for team characteristics. We find that decorated theater stars significantly affect the financial success of theater shows, supporting the MacDonald (1988) version of the superstar hypothesis. Movie stars and celebrities do not seem to affect ticket prices or show revenues. Teams and seasonal effects seem to matter as well.
Keywords: value of human capital; stars; theater
JEL Classification: G32, J24, L82, M12
Suggested Citation: Suggested Citation