Undervaluation of Employee Satisfaction

Posted: 27 Jul 2020 Last revised: 24 Aug 2020

See all articles by jaideep chowdhury

jaideep chowdhury

James Madison University

Umut Celiker

Cleveland State University - Monte Ahuja College of Business

Gokhan Sonaer

Duquesne University

Date Written: July 1, 2020


The prior literature has shown that firms in the list of 100 Best Companies to Work for in America (hereafter BC) earn positive abnormal returns in the period after the list is published in Fortune magazine. In this paper, we assess to what extent the prior performance of stocks is related to this anomaly. We find that these abnormal returns are indeed confined to a subset of BC that have performed poorly over the previous two years. Specifically, over the sample period 1998-2017, a value-weighted portfolio of loser BC earns an annualized three-factor alpha of 12.65% in the subsequent year, while the same figure for other BC is an insignificant 1.11%. Our findings are consistent with the view that mispricing forms over time and support the hypothesis that undervaluing human capital plays a vital role in the BC anomaly.

Keywords: Stock Market Returns, Market Anomalies, Employee Satisfaction, Intangibles, Socially Responsible Investment

JEL Classification: G30, G12, G11

Suggested Citation

chowdhury, jaideep and Celiker, Umut and Sonaer, Gokhan, Undervaluation of Employee Satisfaction (July 1, 2020). Available at SSRN: https://ssrn.com/abstract=3640849 or http://dx.doi.org/10.2139/ssrn.3640849

Jaideep Chowdhury (Contact Author)

James Madison University ( email )

Zane Showker Hall
Harrisburg, VA 22801
United States
5402507285 (Phone)
22807 (Fax)

Umut Celiker

Cleveland State University - Monte Ahuja College of Business ( email )

1860 E 18th St #420
Cleveland, OH 44114
United States

Gokhan Sonaer

Duquesne University

600 Forbes Avenue
Pittsburgh, PA 15282
United States

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