Employee Satisfaction And Shareholder Returns

Abstract

We hypothesize that satisfied employees lead to higher returns for shareholders.  In particular, we investigate whether inclusion on Fortune magazine’s list of “100 Best Companies to Work For” leads to increases in wealth for shareholders.  We find no announcement effect associated with the list release date.  Although we do find that a subset of firms named to the list in one year generate higher returns (than a matched sample) the following year, we conclude that, ex ante, investors would be unable to consistently profit from any information provided by inclusion on the list.  Tests of returns of companies that are dropped from the Fortune list indicate no abnormal performance.