Employee Approval of CEOs and Firm Value: Evidence from Employees’ Choice Awards

38 Pages Posted: 27 Mar 2020 Last revised: 14 Jul 2022

See all articles by Spencer Barnes

Spencer Barnes

The University of Texas at El Paso

Yingmei Cheng

Florida State University - College of Business

Date Written: March 3, 2020

Abstract

Using Glassdoor’s list of “Top CEOs by Employees’ Choice”, we adopt a regression discontinuity (RD) specification, to establish a causal link between the employee approval of CEOs and firm value. Having a CEO included in the top list results in an increase in firm value, in terms of both stock returns and return on assets. Having a top CEO increases both firm efficiency and operating costs, but the magnitude of increase in firm efficiency is significantly larger than that in operating costs. Furthermore, firm efficiency continues to increase in the second year after the list publication, but operating costs do not. Our findings establish that the CEO-employee relationship is an important, though intangible, component of a corporation.

Keywords: CEO-employee relation; top CEO award; employee approval rate; regression discontinuity

JEL Classification: G30, G34, M14

Suggested Citation

Barnes, Spencer and Cheng, Yingmei, Employee Approval of CEOs and Firm Value: Evidence from Employees’ Choice Awards (March 3, 2020). Available at SSRN: https://ssrn.com/abstract=3545481 or http://dx.doi.org/10.2139/ssrn.3545481

Spencer Barnes (Contact Author)

The University of Texas at El Paso ( email )

500 West University Avenue
El Paso, TX 79968
United States

HOME PAGE: http://sites.google.com/view/spencer-barnes

Yingmei Cheng

Florida State University - College of Business ( email )

423 Rovetta Business Building
Tallahassee, FL 32306-1110
United States
850-644-7869 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
239
Abstract Views
1,375
rank
179,432
PlumX Metrics