Does Company Culture Pay Off? Analyzing Stock Performance of “Best Places to Work” Companies

March 11, 2015

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This study conducted three tests to evaluate how company culture and stock performance might be linked. This includes:

  • Whether companies on Glassdoor’s “Best Places to Work” list and Fortune’s 100 “Best Companies to Work For” list outperform the overall stock market through three possible portfolios.
  • Whether being named to the annual Glassdoor list affects short-term stock prices.
  • Whether being low rated according to company reviews on Glassdoor is associated with lower stock returns than the overall stock market.

Key Findings

  • Based on three different portfolios, we find companies named to Glassdoor’s “Best Places to Work” list broadly outperformed the S&P 500 from 2009 to 2014. A simple portfolio of each new class of winners exhibits higher returns than the overall market in 5 out of the past 6 years.
  • Since 2009, a portfolio of Fortune’s “Best Companies to Work For” companies outperformed the S&P 500 by 84.2 percent, while a similar portfolio of Glassdoor’s “Best Places to Work” outperformed the overall market by 115.6 percent.
  • Using a method known as an “event study” we find being named a “Best Place to Work” leads to a roughly 0.75 percent jump in stock returns during the ten days after the announcement—a small but statistically significant effect.
  • As a robustness check, we examined stock returns among public companies with the lowest employee ratings on Glassdoor. We find a portfolio of the 30 lowest-rated public companies on Glassdoor broadly underperformed the market from 2009 to 2014.
  • These results suggest an important economic link between company intangibles, such as employee satisfaction, and broader financial performance among large publicly held companies.