We analyze the efficiency and efficacy of human and intellectual capital investment to better understand the effects of social investment. Existing literature in the corporate setting lacks analysis regarding the impact of human and intellectual capital investment, likely due to data scarcity. We use universities as our research setting because they regularly report standardized data, have similarities with for-profit corporations in terms of size and oversight, and directly support corporate ESG initiatives related to workforce diversity. We find that (1) private donations and government grants increase in human and intellectual capital spending efficiency, (2) graduation rates are higher at universities with more efficient spending for underrepresented students in the lowest quantiles of the graduation rate distribution, and (3) post-graduate income is higher for students from the lowest parental income quintile at universities with higher spending efficiency. Collectively, our evidence suggests that more efficient investment in human and intellectual capital can generate improvements in important ESG outcomes.
