Does employee happiness create value for firm performance?
Abstract This study examines the impact of employee happiness on firm performance in the UK using data from the “Best 100 British Companies to Work For” list (2001–2020). Applying the Carhart four-factor model to monthly data, we find that happier firms outperform the market, generating a monthly al...
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| Format: | Article |
| Language: | English |
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Springer Nature
2025-05-01
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| Series: | Humanities & Social Sciences Communications |
| Online Access: | https://doi.org/10.1057/s41599-025-05024-2 |
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| _version_ | 1849731872883474432 |
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| author | Ihlas Sovbetov |
| author_facet | Ihlas Sovbetov |
| author_sort | Ihlas Sovbetov |
| collection | DOAJ |
| description | Abstract This study examines the impact of employee happiness on firm performance in the UK using data from the “Best 100 British Companies to Work For” list (2001–2020). Applying the Carhart four-factor model to monthly data, we find that happier firms outperform the market, generating a monthly alpha of 32 basis points (3.86% annualized), which increases further to 34 basis points when weighted by ranking. Newly listed firms experience significant abnormal returns, whereas delisted firms show no excess returns, suggesting asymmetric market reactions to inclusion versus removal. Disaggregated analysis by industry shows the highest alpha in the technology sector, where human capital and innovation amplify the role of employee satisfaction. The industrial sector yields more modest alphas, likely reflecting capital intensity, more rigid work environments, and sectoral heterogeneity. A longevity analysis indicates that the market fully incorporates the intangible benefits of listing only after 36 months. Robustness checks using Fama-MacBeth regressions confirm that employee-related factors—such as workplace conditions, rewards, happiness, and demographics—significantly influence firm performance. |
| format | Article |
| id | doaj-art-950c406d73a145a580ea45073d2dc32a |
| institution | DOAJ |
| issn | 2662-9992 |
| language | English |
| publishDate | 2025-05-01 |
| publisher | Springer Nature |
| record_format | Article |
| series | Humanities & Social Sciences Communications |
| spelling | doaj-art-950c406d73a145a580ea45073d2dc32a2025-08-20T03:08:24ZengSpringer NatureHumanities & Social Sciences Communications2662-99922025-05-011211910.1057/s41599-025-05024-2Does employee happiness create value for firm performance?Ihlas Sovbetov0Istanbul Aydın UniversityAbstract This study examines the impact of employee happiness on firm performance in the UK using data from the “Best 100 British Companies to Work For” list (2001–2020). Applying the Carhart four-factor model to monthly data, we find that happier firms outperform the market, generating a monthly alpha of 32 basis points (3.86% annualized), which increases further to 34 basis points when weighted by ranking. Newly listed firms experience significant abnormal returns, whereas delisted firms show no excess returns, suggesting asymmetric market reactions to inclusion versus removal. Disaggregated analysis by industry shows the highest alpha in the technology sector, where human capital and innovation amplify the role of employee satisfaction. The industrial sector yields more modest alphas, likely reflecting capital intensity, more rigid work environments, and sectoral heterogeneity. A longevity analysis indicates that the market fully incorporates the intangible benefits of listing only after 36 months. Robustness checks using Fama-MacBeth regressions confirm that employee-related factors—such as workplace conditions, rewards, happiness, and demographics—significantly influence firm performance.https://doi.org/10.1057/s41599-025-05024-2 |
| spellingShingle | Ihlas Sovbetov Does employee happiness create value for firm performance? Humanities & Social Sciences Communications |
| title | Does employee happiness create value for firm performance? |
| title_full | Does employee happiness create value for firm performance? |
| title_fullStr | Does employee happiness create value for firm performance? |
| title_full_unstemmed | Does employee happiness create value for firm performance? |
| title_short | Does employee happiness create value for firm performance? |
| title_sort | does employee happiness create value for firm performance |
| url | https://doi.org/10.1057/s41599-025-05024-2 |
| work_keys_str_mv | AT ihlassovbetov doesemployeehappinesscreatevalueforfirmperformance |