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Employee satisfaction, firm performance, and stock returns: Evidence from the Korean stock market

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  • Bae, Jaewan
  • Ha, Yu Sung

Abstract

This study investigates the effect of employee satisfaction on firm performance and stock returns in the Korean stock market. We measure employee satisfaction using employee review score data collected from an online job-matching platform. We find that firms with high employee satisfaction earn higher average returns than firms with low employee satisfaction, and the return difference is not explained by prevalent risk factors. Furthermore, employee satisfaction positively affects labor productivity, employee retention rates, and labor investment efficiency, all of which contribute to enhanced firm performance. However, investors do not fully incorporate these positive effects into firm valuations, leading to greater forecast errors regarding the future profitability of firms with higher employee satisfaction.

Suggested Citation

  • Bae, Jaewan & Ha, Yu Sung, 2025. "Employee satisfaction, firm performance, and stock returns: Evidence from the Korean stock market," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:pacfin:v:93:y:2025:i:c:s0927538x25001842
    DOI: 10.1016/j.pacfin.2025.102847
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