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This paper analyzes the relationship between employee satisfaction and long-run stock returns. A portfolio of the "100 Best Companies to Work For in America" earned an annual four-factor alpha of 4% from 1984-2005. The portfolio also outperformed industry- and characteristics-matched benchmarks, and the results are robust to the removal of outliers and other methodological changes. Returns are even more significant in the 1998- 2005 sub-period, even though the list was widely publicized by Fortune magazine. The Best Companies also exhibited significantly more positive earnings surprises and stronger earnings announcement returns.
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