NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Employee Satisfaction, Labor Market Flexibility, and Stock Returns Around The World

Alex Edmans, Lucius Li, Chendi Zhang

NBER Working Paper No. 20300
Issued in July 2014
NBER Program(s):   CF   LE   LS

We study the relationship between employee satisfaction and abnormal stock returns around the world, using lists of the “Best Companies to Work For” in 14 countries. We show that employee satisfaction is associated with positive abnormal returns in countries with high labor market flexibility, such as the U.S. and U.K., but not in countries with low labor market flexibility, such as Germany. These results are consistent with high employee satisfaction being a valuable tool for recruitment, retention, and motivation in flexible labor markets, where firms face fewer constraints on hiring and firing. In contrast, in regulated labor markets, legislation already provides minimum standards for worker welfare and so additional expenditure may exhibit diminishing returns. The results have implications for the differential profitability of socially responsible investing (“SRI”) strategies around the world. In particular, they emphasize the importance of taking institutional features into account when forming such strategies.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20300

Users who downloaded this paper also downloaded these:
Andersson, Haltiwanger, Kutzbach, Pollakowski, and Weinberg w20066 Job Displacement and the Duration of Joblessness: The Role of Spatial Mismatch
Levine and Yang w20302 The Impact of Rainfall on Rice Output in Indonesia
Schanzenbach and Zaki w20308 Expanding the School Breakfast Program: Impacts on Children's Consumption, Nutrition and Health
Bronnenberg, Dube, Gentzkow, and Shapiro w20295 Do Pharmacists Buy Bayer? Informed Shoppers and the Brand Premium
Kroft, Lange, Notowidigdo, and Katz w20273 Long-Term Unemployment and the Great Recession: The Role of Composition, Duration Dependence, and Non-Participation
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us