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Why Should You Invest in the Best Companies to Work For?

Journal of Investing, 23(2), 69-73. May, 2014.

13 Pages Posted: 28 Oct 2011 Last revised: 29 May 2014

Vichet Sum

University of Maryland Eastern Shore - School of Business and Technology

Date Written: November 7, 2013

Abstract

This study provides empirical evidence from the capital market that companies operating and competing in the knowledge-based and information-driven economy should be able to enjoy superior benefits and performance by making themselves as the best companies to work for. The purpose of the study is to analyze stock risk premiums and risk adjusted returns on a portfolio of firms ranked consecutively as the best companies to work for in the United States from 1998 to 2011. The results show that an equal-weighted portfolio of the best companies to work for exhibits positive average risk premiums and average risk-adjusted excess returns majority of the times. The implication of this study is that it is important for firms to take care of their people by making their companies the best places to work for and it will pay off in the short and long runs as evidenced from the capital market. And it is possible to construct a portfolio to earn positive average risk premiums and average risk-adjusted excess returns majority of the times.

Keywords: Risk premiums, risk adjusted excess returns, efficient market hypothesis

JEL Classification: G11, G12, G14

Suggested Citation

Sum, Vichet, Why Should You Invest in the Best Companies to Work For? (November 7, 2013). Journal of Investing, 23(2), 69-73. May, 2014.. Available at SSRN: https://ssrn.com/abstract=1950025 or http://dx.doi.org/10.2139/ssrn.1950025

Vichet Sum (Contact Author)

University of Maryland Eastern Shore - School of Business and Technology ( email )

2105 Kiah Hall
Princess Anne, MD 21853
United States
410-651-6531 (Phone)
410-651-6529 (Fax)

HOME PAGE: http://www.umes.edu/bma/Sum.html

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