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5 Companies Where Happy Employees Make for Wonderful Stocks

Satisfied employees means better long-term stock returns

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Alex Edmans is an associate professor of finance at The Wharton School of the University of  Pennsylvania. In 2012, Edmans published a paper demonstrating that job satisfaction has a lot to do with the value of a firm and future stock returns. In essence, happy employees make for wonderful stocks.

happy employees
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Between 1984 and 2011, the “100 Best Companies to Work For in America” delivered annual stock returns that were 2.3% to 3.8% better than their peers.

Edmans’ research led him to three main conclusions:

  1. Job satisfaction causes stronger corporate performance
  2. Corporations that are socially responsible often achieve better stock returns
  3. Intangible assets — such as satisfied employees — rarely affect stock prices until tangibles valued by the market such as earnings announcements appear on the scene.

Some people tend to dismiss lists like the one Fortune publishes annually, but that would be a mistake. Edmans’ results clearly demonstrate there is a causal relationship between job satisfaction and higher stock returns.

Edmans points out in his paper that about one-third of the list turns over every year. Simply picking the top five companies on the list for 2014 isn’t going to guarantee success. Instead, we need to find five companies who’ve consistently made the list over an extended period of time and not just one year.

Who are the top five companies where happy employees equal wonderful stocks? Read on to find out which companies are making their employees — and their investors — happy.

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Article printed from InvestorPlace Media,

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