"Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices" - Alex Edmans, January 2010


"Abstract:  This paper analyzes the relationship between employee satisfaction and long-run stock returns. A value-weighted portfolio of the "100 Best Companies to Work For in America" earned an annual four-factor alpha of 3.5% from 1984-2009, and 2.1% above industry benchmarks. The results are robust to controls for firm characteristics, different weighting methodologies and the removal of outliers. The Best Companies also exhibited significantly more positive earnings surprises and announcement returns. These findings have three main implications. First, consistent with human capital-centered theories of the firm, employee satisfaction is positively correlated with shareholder returns and need not represent managerial slack. Second, the stock market does not fully value intangibles, even when independently verified by a highly public survey on large firms. Third, certain socially responsible investing ("SRI") screens may improve investment returns."

"Engaged Employees Help Boost the Bottom Line" -  ISR, June, 2006


ISR's new global employee engagement study reveals that companies with highly engaged employees demonstrate significantly stronger bottom-line results over a 12-month period than companies with low employee engagement scores.

"Which comes first, organizational culture or performance" -  Anthony S Boyce, Levi R G Nieminen; Michael A Gillespie; Ann Marie Ryan; Daniel R Denison, April, 2015


"Prior research supports a link between organizational culture and performance but generally falls short of establishing causality or determining the direction of a culture-performance (C-P) relationship. Using data collected from 95 franchise automobile dealerships over 6 years, we studied longitudinal culture-performance relationships to determine whether culture or performance has causal priority, or alternatively, whether a reciprocal relationship exists. Results from cross-lagged panel analyses indicate that culture “comes first,” consistently predicting subsequent ratings of customer satisfaction and vehicle sales. Furthermore, the positive effect of culture on vehicle sales is fully mediated by customer satisfaction ratings."

"How Your Employees and Customers Drive a New Value Profit Chain" -  W. Earl Sasser and James L. Heskett, March, 2003


"Thinking of your customers and employees as key creators of value can produce profitable results."


"Radical Innovation across Nations: The Preeminence of Corporate Culture" -  Rajesh K. Chandy,  Gerard J. Tellis, Jaideep C. Prabhu, January, 2009

"Corporate culture is, above all, the most important factor in driving innovation. Firm level factors are more important than anything else -- even location -- in predicting radical innovation. The commercialization of radical innovations is a stronger indicator of financial performance than other popular measures such as patents."


"Exploring the Link between Corporate Stakeholder Orientation and Quality of Corporate Social Responsibility Reporting" -  Nikolina Markota Vukic, Mislav Ante Omazic and Ana Aleksic, 2018

"Research results indicate a positive link between the level of corporate stakeholder orientation and the quality of CSR reporting."

"Corporate Culture and Performance" -  Kotter, John P. and Heskett, James L., 1992

"An 11-year study by Harvard researchers John Kotter and James Heskett detailed how company culture affects long-term performance. This study highlights a staggering difference between companies that possessed characteristics associated with performance-enhancing cultures versus those that did not."



"Organizational Culture: An Overlooked Internal Risk" -  Paul Edelman, Srikanth Seshadri and Randeep Rathindran, October,  2010

"Companies that encourage and support open communications outperform their peers, according to research from the Corporate Executive Board"



"Corporate Sustainability: First Evidence on Materiality" -  Mozaffar Khan, George Serafeim & Aaron Yoon, March, 2015

"The relatively new class of corporate investments known as sustainability investments has attracted the attention of firms, institutional investors, academics, and societal advocacy groups. This paper examines in depth how such investments enhance value for shareholders. Results overall show that investments in material sustainability issues can be value-enhancing for shareholders while investments in immaterial sustainability issues have little positive or negative, if any, value implications."

"Valens Investor Essentials: As ESG investing gains popularity, it’s time for investors to seriously consider the top ESG funds" - Valens Research, May 2021

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"Investors must analyze everything from a company’s management team, employee engagement, and innovation, to its shareholder engagement. Understanding how all these aspects of a company intertwine with a given business strategy can create longer-lasting profitability. This is the goal of ESG investing, and it is not being discussed nearly enough. One group that is doing this broader work is Concinnity Advisors, with its Global X Conscious Capital Companies ETF (KRMA).."

"The Multi-stakeholder Operating System" - David Wolfe, Rick Frazier, January 2010

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"A multi-stakeholder operating system turns stakeholders from mostly passive observers and beneficiaries into more active partners in creating value. Who is a stakeholder? Any person or group in a position to experience gain or loss from a company’s operation. Obviously, no company can concern itself directly with all stakeholders coming within the sweep of that definition. Limits must be placed on how broad and deep a company extends its outreach to stakeholders. We suggest organizations should focus their attention on five primary stakeholders: Customers, Employees, Suppliers, Communities and Investors."


"The Multi-stakeholder Operating System and CSR" - Rick Frazier, June 2010

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"For instance, consider a company that enjoys a strong positive reputation for being a good corporate citizen. A legitimate question from an investor’s perspective is, “How much does this contribute to growth and profitability?” Advocates for the company might feel that its corporate citizenship practices account for some increment of growth and profitability. However, unless a company has bothered to build a causal model and communicate the output from the model, the reality is that no one really knows. Thus, the task of linking companies’ social responsibility profiles to their financial performance tends to be more subjectively determined than the product of statistically rigorous analysis."

"Value Destruction and Financial Reporting Decisions" - John R. Graham, Campbell R. Harvey, and Shiva Rajgopal, 2006


"Abstract:  The comprehensive survey reported here allowed analysis of how senior U.S. financial executives make decisions related to performance measurement and voluntary disclosure. Chief financial officers were asked what earnings benchmarks they cared about and which factors motivated executives to exercise discretion—even sacrifice economic value—to deliver earnings. These issues are crucially linked to stock market performance. The results show that the destruction of shareholder value through legal means is pervasive, perhaps even a routine way of doing business. Indeed, the amount of value destroyed by companies striving to hit earnings targets exceeds the value lost in recent high-profile fraud cases."

"Customer Value Governance: The Emerging Corporate Imperative" - Richard J. Frazier and Gerard  F. McDonough, 2002

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"Most corporate leaders and financial analysts would agree that long-term shareholder value is created by consistently providing value to customers in an economically profitable manner. Customer value governance is a strategy to achieve this corporate imperative. It ensures growth is both profitable and capital efficient while building reliable indicators of future performance.


Customer value makes an eye-popping contribution to the market value placed on companies with large, complex customer portfolios, yet investors and analysts are seldom provided with sufficient information to accurately gauge the health of this core asset. This unnecessarily creates higher perceived risk, and in turn, increases your cost of capital. The uncertainty surrounding this lack of information is alleviated by opting to disclose how customer value is being measured, monitored and maximized. Customer value governance makes this option possible."

"Decades ahead of her time: Advancing stakeholder theory through the ideas of Mary Parker Follett" - Melissa A. Schilling, July 2000

“Though the work of Mary Parker Follett predates the field of stakeholder theory by almost 60 years, and no reference to her work is found in the stakeholder literature, many of the tenets of stakeholder theory echo Follett’s ideas precisely. More importantly, Follett’s work yields a much richer foundation for stakeholder theory, as well as providing direction for its advancement. The article traces both the similarities and differences between Follett’s work and that of contemporary stakeholder theorists, and shows how Follett’s ideas can be used to enhance our current understanding of the theory and improve its implementation.”


"The Social Responsibility of Business is to Increase its Profits" - Milton Friedman , NY Times Magazine, September 1970

Milton_Friedman_The Social Responsibility of Business is to Increase its Profits.docx

“In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.”

"Milton Friedman Was Wrong About Corporate Social Responsibility" - John Friedman , Huffington Post, August, 2013

“Any business, if its wants to be sustained over time, must maximize its profits but do so in a manner that meets the needs of the stakeholders that allow it to remain viable. When those needs change, businesses have a responsibility to adapt their behaviors accordingly if it wishes to survive. That is the piece that Mr. Friedman’s argument missed. The rules of the game have changed in fundamental ways — and people today expect (and demand) more of business than simply that they maximize their profits without coming to grief by some violation of law.”

"The Bottom Line: Corporate Performance and Women’s Representation on Boards (2004–2008)" - Catalyst


Companies with the most women board directors (WBD) outperform those with the least on ROS by 16 percent.

Companies with the most WBD outperform those with the least on ROIC by 26 percent.

Companies with sustained high representation of WBD, defined as those with three or more WBD in at least four of five years, significantly outperformed those with sustained low representation by 84 percent on ROS, by 60 percent on ROIC, and by 46 percent on ROE

"Board Gender Diversity, Innovation and Firm Performance", Jie Chen, Woon Sau Leung and Kevin P Evans, May 25, 2015

"Abstract:  We find that firms with more gender-diverse boards achieve greater innovative success. The results are not driven by endogenous matching between female directors and firms with high innovative potential. Investigating the underlying mechanisms, the positive effect of gender diversity on innovation is stronger when product market competition is lower and when managers are more entrenched, consistent with increased monitoring by female directors improving manager’s incentives to innovate. Furthermore, we find that although gender diversity does not enhance firm performance on average, it increases the performance of firms for which innovation and creativity play a particularly important role."

"Women on Boards and Firm Financial Performance: A Meta-Analysis",  Corinne Post and Kris Byron, November 10, 2014

"Despite a large body of literature examining the relationship between women on boards and firm financial performance, the evidence is mixed. To reconcile the conflicting results, we statistically combine the results from 140 studies and examine whether these results vary by firms’ legal/regulatory and socio-cultural contexts. We find that female board representation is positively related to accounting returns and that this relationship is more positive in countries with stronger shareholder protections—perhaps because shareholder protections motivate boards to use the different knowledge, experience, and values that each member brings. We also find that, although the relationship between female board representation and market performance is near zero the relationship is positive in countries with greater gender parity (and negative in countries with low gender parity)—perhaps because societal gender differences in human capital may influence investors’ evaluations of the future earning potential of firms that have more female directors. Lastly, we find that female board representation is positively related to boards’ two primary responsibilities: monitoring and strategy involvement. For both firm financial performance and board activities, we find mean effect sizes comparable to those found in meta-analyses of other aspects of board composition. We discuss the theoretical and practical implications of our findings."