The value of employee satisfaction in disastrons tines evidence ftom covid 19
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The value of employee satisfaction in disastrons tines evidence ftom covid 19
The Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19*Chenyu ShanShanghai University of Finance and Economics Email: shaii-ch The value of employee satisfaction in disastrons tines evidence ftom covid 19 henvu@tnail.sufe.edu.cnDragon Yongjun TangThe University of Hong Kong Email: yjtang@liku.hkJuly 10. 2020AbstractEmployee treatment is a dilemma for many business owners and executives: while everyone prefers a pleasant working environment, satisfying employee needs can be costly to shareholders. Giv The value of employee satisfaction in disastrons tines evidence ftom covid 19 en such costs, is it still worthwhile to make employees happy on a daily basis'? This study provides evidence supporting a positive answer: firms withThe value of employee satisfaction in disastrons tines evidence ftom covid 19
more satisfactory employees heading into the COVID-19 withstand the crisis better according to stock price reaction. Such outperformance by high-emplThe Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19*Chenyu ShanShanghai University of Finance and Economics Email: shaii-ch The value of employee satisfaction in disastrons tines evidence ftom covid 19 he result is not driven by state ownership, information asymmetry, or insider propping. Our findings show the importance of employee morale during crisis period and that firms can do well by doing good.Keywords: Employee satisfaction. Shareholder value. Intangible assets. COVID-19JEL classification: The value of employee satisfaction in disastrons tines evidence ftom covid 19 G32, G34■ We thank Rui Albuquerque. Alex Edmans. Hao Liang. Jun-Koo Kang. Alan Kwan. Gustavo Manso. Henri Servaes. Fei Xie. Quan Wen. Chendi Zhang. JThe value of employee satisfaction in disastrons tines evidence ftom covid 19
ian Zhang, and Joe Zou for helpful comments. We thank MioTech for providing some of the data. Tang acknowledges the support of the General Research FuThe Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19*Chenyu ShanShanghai University of Finance and Economics Email: shaii-ch The value of employee satisfaction in disastrons tines evidence ftom covid 19 Science Foundation of China.Electronic copy available at: https://ssrn.com/abstract=3560919The Value of Employee Satisfaction in Disastrous l imes: Evidence from COVID-19AbstractEmployee treatment is a dilemma for many business owners and executives: while everyone prefers a pleasant working enviro The value of employee satisfaction in disastrons tines evidence ftom covid 19 nment, satisfying employee needs can be costly to shareholders. Given such costs, is it still worthwhile to make employees happy on a daily basis? ThiThe value of employee satisfaction in disastrons tines evidence ftom covid 19
s study provides evidence supporting a positive answer: linns with more satisfactory employees heading into the COVID-19 withstand the crisis better aThe Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19*Chenyu ShanShanghai University of Finance and Economics Email: shaii-ch The value of employee satisfaction in disastrons tines evidence ftom covid 19 ge-based industries, and for FinTech-developed cities. Moreover, the result is not driven by state ownership, information asymmetry, or insider propping. Our findings show the importance of employee morale during crisis period and that firms can do well by doing good.Keywords: Employee satisfaction. The value of employee satisfaction in disastrons tines evidence ftom covid 19 Shareholder value. Intangible assets, co VID-19JF.I. classification: G32, G34ble at: https:.'/ssfn.coirb‘abstiact1. IntroductionIs it worthwhile forThe value of employee satisfaction in disastrons tines evidence ftom covid 19
a firm to treat its employees well on a daily basis? The answer is not obvious because it is costly to improve employee treatment. In absence of regulThe Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19*Chenyu ShanShanghai University of Finance and Economics Email: shaii-ch The value of employee satisfaction in disastrons tines evidence ftom covid 19 ancing cost. Indeed, there is large-sample evidence showing that businesses are more likely to fail when they provide safer workplace.* 1 Some believe that relentless firms with merely acceptable working conditions produce more profits for their shareholders. However, there are also potential benefi The value of employee satisfaction in disastrons tines evidence ftom covid 19 ts associated with better employee treatment such as talent recruiting and retention as well as enhanced productivity. In this paper, we examine stockThe value of employee satisfaction in disastrons tines evidence ftom covid 19
price performance during COVID-19 to draw new inference on this issue. This setting is interesting as many firms are at the edge of survival and emplThe Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19*Chenyu ShanShanghai University of Finance and Economics Email: shaii-ch The value of employee satisfaction in disastrons tines evidence ftom covid 19 satisfactory employees will work harder to increase firm value, especially when the firms are facing severe difficulties. However, if employees feel they are already contributing to a good social cause, they may engage more in unethical behavior including shirking and cheating at work, due to the s The value of employee satisfaction in disastrons tines evidence ftom covid 19 o-called “moral licensing" (List and Momeni. 2020). COVID-19 forced many people to work from home, making shirking a real concern. It is not obvious wThe value of employee satisfaction in disastrons tines evidence ftom covid 19
hat types of firms would perform better during such a crisis. Employees from firms with hostile working environment are probably used to coordination The Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19*Chenyu ShanShanghai University of Finance and Economics Email: shaii-ch The value of employee satisfaction in disastrons tines evidence ftom covid 19 ontrast, firms with good employee morale may become1 See Pagell et al. (2020). which is based on 386.179 organizations in Oregon, USA from 1989 to 2014 They find that the odds and length of survival are smaller for firms providing a safe workplace.1Electronic copy available at: https://ssrn.com/abst The value of employee satisfaction in disastrons tines evidence ftom covid 19 ract=3560919less productive under “social distancing" as bonding and collegiality play an important role for their work. COVID-19 provides a rare oppoThe value of employee satisfaction in disastrons tines evidence ftom covid 19
rtunity to examine the value of employee satisfaction and generate implications on corporate employment policies.The COVĨD-I9 setting also helps circuThe Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19*Chenyu ShanShanghai University of Finance and Economics Email: shaii-ch The value of employee satisfaction in disastrons tines evidence ftom covid 19 ogenous shock brought by COVTD-19 hence is usefill for the empirical identification. Tn this study, we use novel data to analyze the short-run reaction of stock prices to the outbreak of COVID-19 to quantify the value of employee satisfaction from a shareholder’s point of view. Our employee satisfac The value of employee satisfaction in disastrons tines evidence ftom covid 19 tion data come from MioTech, a leading FinTech company based in Hong Kong that specializes in environmental, social and governance (ESG) information fThe value of employee satisfaction in disastrons tines evidence ftom covid 19
or Chinese firms, covering all publicly listed Chinese companies (and many private companies).' MioTech uses natural language processing to crowdsourcThe Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19*Chenyu ShanShanghai University of Finance and Economics Email: shaii-ch The value of employee satisfaction in disastrons tines evidence ftom covid 19 two stock exchanges in mainland China (‘A-shares’ in Shanghai and Shenzhen). We focus on February 3. 2020. the first trading day after the lockdown of Wuhan the Chinese city where the first infected case was identified and the largest number of infected patients resided.4 We find that while Chinese The value of employee satisfaction in disastrons tines evidence ftom covid 19 slocks experienced record drops on that day. firms with higher employee satisfaction scores withstood the negative shock better than firms with lowerThe value of employee satisfaction in disastrons tines evidence ftom covid 19
employee satisfaction scores, rhe economic magnitude of the result is meaningful: the high-low return- MioTech is financed by Horizons Ventures. rhe The Value of Employee Satisfaction in Disastrous Times: Evidence from COVID-19*Chenyu ShanShanghai University of Finance and Economics Email: shaii-ch The value of employee satisfaction in disastrons tines evidence ftom covid 19 ug-dunvĩ-itivug-bat.i.uig-iioug-kuuạs-iiul.xh-MXlơr-kadiughttrw. .’WWW-finttchfitrnrei-Crtin '2020’01 hon-ĩ4rGọi ngay
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