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Employee Satisfaction, Firm Value and Firm Productivity

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Author Info
Roger Best () (University of Central Missouri)
Abstract

We examine whether self-reported employee satisfaction is associated with higher firm valuation and productivity. Using a sample of firms from Fortune magazine’s list of "100 Best Companies to Work For", companies in which employees report high levels of satisfaction, we find that these firms have valuations that are significantly greater than both their respective industry medians and matched firms. The firms in our sample also exhibit greater levels of productivity and efficiency. Thus, successful efforts in increasing employee satisfaction appear to enhance overall firm productivity, which is subsequently rewarded by investors through higher equity values.

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File URL: http://faculty.ucmo.edu/econfinpapers/wpaper/wp0806.pdf
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Publisher Info
Paper provided by University of Central Missouri, Department of Economics & Finance in its series Working Papers with number 0806.

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Length: 23 pages
Date of creation: May 2008
Date of revision: May 2008
Handle: RePEc:umn:wpaper:0806

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Related research
Keywords: Employee satisfaction; firm value; firm productivity;

Find related papers by JEL classification:
G30 - Financial Economics - - Corporate Finance and Governance - - - General
G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Levine, David I, 1992. "Can Wage Increases Pay for Themselves? Tests with a Production Function," Economic Journal, Royal Economic Society, vol. 102(414), pages 1102-15, September. [Downloadable!] (restricted)
  2. Wadhwani, S. & Wall, M., 1988. "A Direct Test Of The Efficiency Wage Model Using Uk Micro- Data," Papers 313, London School of Economics - Centre for Labour Economics.
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  3. Snipes, Robin L. & Oswald, Sharon L. & LaTour, Michael & Armenakis, Achilles A., 2005. "The effects of specific job satisfaction facets on customer perceptions of service quality: an employee-level analysis," Journal of Business Research, Elsevier, vol. 58(10), pages 1330-1339, October. [Downloadable!] (restricted)
  4. Filbeck, Greg, 2001. "Mother Jones: Do better places to work imply better places to invest?," Review of Financial Economics, Elsevier, vol. 10(1), pages 57-70. [Downloadable!] (restricted)
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