The Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19

42 Pages Posted: 26 Mar 2020 Last revised: 13 Jul 2020

See all articles by Chenyu Shan

Chenyu Shan

Shanghai University of Finance and Economics

Dragon Yongjun Tang

The University of Hong Kong - Faculty of Business and Economics

Date Written: July 10, 2020

Abstract

Employee treatment is a dilemma for many business owners and executives: while everyone prefers a pleasant working environment, satisfying employee needs can be costly to shareholders. Given such costs, is it still worthwhile to make employees happy on a daily basis? This study provides evidence supporting a positive answer: firms with more satisfactory employees heading into the COVID-19 withstand the crisis better according to stock price reaction. Such outperformance by high-employee-satisfaction firms is more pronounced for financially weaker firms, for knowledge-based industries, and for FinTech-developed cities. Moreover, the result is not driven by state ownership, information asymmetry, or insider propping. Our findings show the importance of employee morale during crisis period and that firms can do well by doing good.

Keywords: Employee satisfaction, Shareholder value, Intangible assets, Coronavirus, COVID-19

JEL Classification: G32, G34

Suggested Citation

Shan, Chenyu and Tang, Dragon Yongjun, The Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19 (July 10, 2020). Available at SSRN: https://ssrn.com/abstract=3560919 or http://dx.doi.org/10.2139/ssrn.3560919

Chenyu Shan (Contact Author)

Shanghai University of Finance and Economics ( email )

100 Wudong Road
Shanghai
China

Dragon Yongjun Tang

The University of Hong Kong - Faculty of Business and Economics ( email )

KKL 1004
Pokfulam Road
Pokfulam
Hong Kong
(852)22194321 (Phone)

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