Harvard Business School International Seminar
Date and Time
Location
“The Power of Silent Voices: Employee Satisfaction and Acquirer Stock Performance”
Speaker:
Sea-Jin Chang, Lim Kim San Chair Professor, National University of Singapore.
Contact:
Katie Moore
kmoore@hbs.edu
Chair:
Raj Choudhury, Assistant Professor of Business Administration, Technology and Operations Management Unit, Harvard Business School.
Abstract:
Employees are a firm’s most valuable asset. To test whether this statement is more than just rhetoric, we assemble a novel social media dataset that captures the level of employee satisfaction in S&P 500 firms and explore its relationship with stock returns in the aftermath of mergers and acquisitions. Our results show that employee satisfaction has a strong long-term positive effect on acquirer stock performance, even though its short-term effect on cumulative abnormal returns is largely insignificant. This is in contrast with previous studies wherein the external evaluations of corporate social responsibility have had significant short-term but weaker long-term effects on equity prices. Our results suggest the stock market is unable to fully incorporate the value of employee satisfaction.