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| Author: | Edmans, A. |
| Title: | Does the stock market fully value intangibles? Employee satisfaction and equity prices |
| Journal: | Journal of Financial Economics
2011 : SEP, VOL.101:3, p. 621-640 |
| Index terms: | market efficiency human capital stock markets value analysis employees share prices social responsibility investment |
| Freeterms: | intangibles underreaction satisfaction |
| Language: | eng |
| Abstract: | This article analyzes the relationship between employee satisfaction and long-run stock returns. Based on a value-weighted portfolio of the "100 Best Companies to Work For in America" earned an annual four-factor alpha of 3.5% from 1984 to 2009, and 2.1% above industry benchmarks. It is found the following: 1) consistent with human capital-centered theories of the firm, employee satisfaction is positively correlated with shareholder returns and need not represent managerial slack. 2) the stock market does not fully value intangibles, even when independently verified by a highly public survey on large firms. 3) certain socially responsible investing (SRI) screens may improve investment returns. |
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