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Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices - ICMA Centre

Employee satisfaction and equity prices Alex Edmans Obfuscate 'london. This paper analyzes the relationship between employee satisfaction and long-run stock returns.

A value-weighted portfolio of the " Best Companies to Work For in America" earned an annual four-factor alpha of 3. The results are robust to controls for firm characteristics, different weighting methodologies, and the removal of outliers.

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The Best Companies also exhibited significantly more positive earnings surprises and announcement returns. These findings have three main implications.

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First, consistent with human capital-centered theories of the firm, employee satisfaction is positively correlated with shareholder returns and need not represent managerial slack. Second, the stock market does not fully value intangibles, even when independently verified by a highly public survey on large firms. Third, certain socially responsible investing SRI screens may improve investment returns.

Intangibles ; Market ; efficiency ; Underreaction ; Human ; capital ; Socially ; responsible ; investing search for similar items in EconPapers Date: View references in EconPapers View complete reference list from CitEc Citations View citations in EconPapers Track citations by RSS feed Downloads: This item may be available elsewhere in EconPapers: Search for items with the same title.

William Schwert More articles in Journal of Financial Economics from Elsevier Series data maintained by Dana Niculescu Obfuscate 'elsevier.

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Does the stock market fully value intangibles?