Does Employee Happiness Create A Value On Stocks?

14 Pages Posted: 26 Aug 2014 Last revised: 21 Jun 2017

Date Written: June 11, 2016


This paper studies impact of employee happiness on stock prices. Using Carhart’s (1997) four-factor analysis, we document an existence of 0.3160% monthly (3.86% annualized) abnormal returns in equal-weighted portfolio of the “Best 100 Companies to Work For” during 2001-2015 periods. Additionally, we shows that this monthly alpha can be maximized up to 0.3385% (3.77% annualized) just by altering weights of portfolios on the basis of firms' list rankings.

Besides, the paper also sheds light on superiority/inferiority of newcomer/dropped firms in terms of earning abnormal returns. We observe that ranking-weighted newcomers' portfolio generate 0.3806% monthly (4.66% annualized) four-factor alpha, while dropped firms' portfolio gets a negative monthly alpha of 0.1755% (-2.09% annualized).

Lastly, our longevity analysis reveals inefficiency of market in valuing intangibles immediately. The findings indicate that appearing on the happiest list creates a value, but the market assimilates it only after 27 months.

Keywords: Employee Satisfaction, Employee Happiness, Market Efficiency, Carhart Four-Factor Model, Four-factor Alpha, Abnormal Stock Returns

JEL Classification: G11, G15, G31

Suggested Citation

Sovbetov, Yhlas, Does Employee Happiness Create A Value On Stocks? (June 11, 2016). Available at SSRN: or

Yhlas Sovbetov (Contact Author)

London School of Commerce ( email )

United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics