Glassdoor best places to work: how do they work for shareholders?

Purpose: This research explores whether Glassdoor's annual rankings of the Best Places to Work provide meaningful information to shareholders in identifying companies with the potential for superior future performance. Because their website reaches over 64 million unique visitors monthly, Glassdoor rankings can influence trading patterns. Glassdoor’s awards offer a unique way to analyze employees' feedback as there is no self-nomination process or cost involved, differentiating it from other measures of job satisfaction such as Fortune’s Best Companies to Work For survey. Design/methodology/approach: We compare holding period returns of the Best Companies firms to the performance of the S&P 500 index and three separately constructed matched benchmark portfolios. We calculate cumulative raw, risk-adjusted, and abnormal returns based on a buy-and-hold strategy as well as by using the Fama-French (1993) 3-factor and 4-factor models. We also analyze whether selected companies have higher performance one year after the announcement. We control for possible endogeneity problems. Findings: We find mixed evidence regarding the superiority of the Best Company firms in holding period returns and risk-adjusted measures compared to appropriate benchmarks. Longer-term cumulative raw returns show that they have higher annual returns compared with its benchmarks. The differences are not statistically significant on a raw or risk-adjusted basis. Research limitations/implications: The Best Companies sample is much larger than the matched sample, even with multiple matching methodologies. This difference is limited by the survey design as the employees of larger companies tend to post in Glassdoor survey. Also, since companies in the small Best Companies sample are private companies, comparing their stock performance with comparable companies is challenging. Practical implications: Human resource management theories argue that job satisfaction results in enhanced corporate performance. However, verification of such satisfaction by a Glassdoor, as a third-party survey, does not necessarily lead to higher risk-adjusted share price performance. Originality/value: We extend previous work that focuses on analyzing employee reviews to consider the impact of being ranked among the best companies on the survey. Second, we employ an extended set of financial performance measures to assess impact. Our analysis also employs a wider range of financial performance metrics and robustness tests.