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Employee Benefits And Stock Returns: A Look At Health Care Benefits

Author

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  • Vichet Sum

Abstract

This study finds firms that pay their employees’ health-care premiums earn average positive risk premiums and positive risk-adjusted excess returns. The problem of the study is to analyze risk premiums and risk adjusted returns of an equal-weighted portfolio of firms that pay 100% of their employee’s health-care premiums. The results show that the portfolio average risk premiums are positive and greater than the market risk premiums from 2007 to 2011 (except 2008). The portfolio average risk-adjusted excess returns are positive for the 3-year holding period intervals and statistically significant for the 5- year holding period. The implication of this study is that it is important for firms to invest in their people in the form of competitive compensation package, and this investment will pay off in the long run as evidenced from the capital market.

Suggested Citation

  • Vichet Sum, 2013. "Employee Benefits And Stock Returns: A Look At Health Care Benefits," Accounting & Taxation, The Institute for Business and Finance Research, vol. 5(1), pages 1-8.
    • Handle: RePEc:ibf:acttax:v:5:y:2013:i:1:p:1-8
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    References listed on IDEAS

    as
    1. Carhart, Mark M, 1997. "On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
    2. Loviscek, Anthony L. & Jordan, W. John, 2000. "Stock selection based on Morningstar's ten-year, five-star general equity mutual funds," Financial Services Review, Elsevier, vol. 9(2), pages 145-157, 00.
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    More about this item

    Keywords

    Risk premiums; Risk adjusted excess returns; Health-care premiums;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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