"Most importantly, we find that firms with shared governance have about 40 to 50% larger fixed (long-term) capital stocks – sharply contradicting the disinvestment predicted by the hold-up and agency cost views of shared governance (see, e.g., Jensen and Meckling, 1979). The positive effects on capital formation even outpace a small increase in employment, leading the capital/labor ratio to increase. We further document a large and significant increase in the capital share of 8ppt (control mean: 0.30). Thus, shared governance shifts firms toward a more capital-intensive mode of production."