Corporate Sustainability and Stock Returns: Evidence from Employee Satisfaction

37 Pages Posted: 24 Jun 2020

See all articles by Kyle Welch

Kyle Welch

George Washington University; George Washington University - Department of Accountancy

Aaron Yoon

Northwestern University - Department of Accounting Information & Management

Date Written: June 2, 2020

Abstract

We provide evidence that ESG improves shareholder value when employees are satisfied. Using calendar-time portfolio stock returns and firm-level panel regressions, we find that firms with high ratings on both ESG and employee satisfaction significantly outperform those with low ratings on both and with high employee satisfaction alone. Our results are confirmed when we analyze future changes in accounting performance. Overall, results suggest that ESG coupled with employee satisfaction enhance shareholder value and these findings have implications not only for asset managers who integrate ESG factors into their portfolios but also for firm managers who implement ESG practices.

Keywords: ESG; CSR; Human Capital; Investment Performance

Suggested Citation

Welch, Kyle and Yoon, Aaron, Corporate Sustainability and Stock Returns: Evidence from Employee Satisfaction (June 2, 2020). Available at SSRN: https://ssrn.com/abstract=3616486 or http://dx.doi.org/10.2139/ssrn.3616486

Kyle Welch

George Washington University ( email )

School of Business and Public Management
Washington, DC 20052
United States

HOME PAGE: http://https://business.gwu.edu/kyle-welch

George Washington University - Department of Accountancy ( email )

School of Business and Public Management
Washington, DC 20052
United States

HOME PAGE: http://https://business.gwu.edu/kyle-welch

Aaron Yoon (Contact Author)

Northwestern University - Department of Accounting Information & Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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