Employee Satisfaction and Long-Run Shareholder Returns

Chun-Hung (Hugo) Tang
Ji-Eun Lee, University of Central Florida


This study empirically tests whether there are differences in the employee satisfaction premium among people- and possession-processing service firms, information-processing service firms, and goods-producing firms. The employee satisfaction premium is measured using the long-run abnormal returns of firms with high employee satisfaction ratings, adjusted for industry and size effects. Results show that the employee satisfaction premium is higher for information-processing services than for people- and possession-processing services. There is no significant difference between people- and possession-processing service firms and goods-producing firms. This finding suggests that employee satisfaction may create higher value for shareholders when it is realised through information-processing services rather than people- and possession-processing services.