Satisfied Employees, Satisfied Investors: How Employee Well-being Impacts Mutual Fund Returns

Abstract

This paper uses proprietary data on self-reported employee reviews from Glassdoor.com to study the relationship between employee satisfaction and mutual funds’ performance. Using the staggered adoption of Anti-SLAPP (Strategic Lawsuits Against Public Participation) laws in the U.S. and variation from mergers between asset management companies to identify exogenous variation in job satisfaction, we find that employee satisfaction is positively linked to fund performance and size but that only performance-critical employees' satisfaction matters. A one-point increase on the 5-point scale of employee satisfaction leads to a 36bps increase in abnormal fund performance. Finally, while there is a positive effect of employee satisfaction on risk-taking, we cannot establish a causal relationship.

Keywords: Mutual fund, employee satisfaction, performance, risk-taking, mergers

JEL Classification: G10, G12, G14