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

Jaewan Bae and Yu Sung Ha

Pacific-Basin Finance Journal, 2025, vol. 93, issue C

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.

Keywords: Human capital; Employee satisfaction; ESG; Stock returns; Market efficiency (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:93:y:2025:i:c:s0927538x25001842

DOI: 10.1016/j.pacfin.2025.102847

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