Labor productivity, measured as the industry-standardized ratio of sales to number of employees, has an ability to predict average stock returns. In the portfolio sort, firms with high labor productivity earn higher expected returns than those with low productivity. The difference in returns is...

Asset turnover, an inside component of profitability in the Dupont analysis, has an ability to predict average stock returns. In the portfolio sort, firms with high asset turnover earn high expected returns, which is unexplained by risk-adjusted asset pricing models. In the cross-section, asset...

Employment growth (EG) is likely related to liquidity fundamentals of investment opportunities, firm health, and information environment. This, in turn, implies that liquidity risk may play a role in explaining the relation between employment growth and stock returns. We explain the link between...