Josh Zumbrun wrote about how a company’s treatment of its employees affects its market performance:

• Ratings from Glassdoor, a website where people can anonymously rate their employers, similar to Yelp for restaurants, can be used to figure out how satisfied people are with their workplaces.
• Research indicates that companies that are rated well have outperformed stock market indices.
• A strategy where investors buy stock in companies that make the grade of best companies to work for, and sell them in places that are bad to work for, will have returned 219% since 2008, compared to the S&P 500’s 121%.
• This might be because a company that does well has more money to spend on employee perks.
• High employee satisfaction may also make it easier for a company to retain its best workers.
• Or perhaps automated investment algorithms pick up on any good news about a company from sites such as Glassdoor, and buy stock in it, driving up its price.

Read why this relationship may not last for long, what academic research indicates, and more over here.

Source: The Wall Street Journal