Author: R Fang，B Gao，N Hu

Abstract:In this study, we utilize the employee online review data from Glassdoor to examine whether stock market capitalizes the intangible asset value of employee satisfaction for high-contact service firms. We hypothesize that in the hospitality and tourism industry, employee satisfaction can efficiently motivate employees to deliver high-quality service and improve the employee retention, thereby leading to greater shareholder value. Our finding is consistent with this prediction that stock market investors indeed incorporate the intangible value of employee satisfaction into the valuation models. In addition, we find that the value of such intangible asset manifests in firm's subsequent profitability, resulting in improved return on asset (ROA). We further decompose ROA into profit margin and asset turnover to explore the pathways by which employee satisfaction affects shareholder value. We find that employee satisfaction can improve both profit margin and asset turnover for high-co ntact service firms. Overall, our study suggests that employee satisfaction can be an important intangible asset that contributes to the service firms’ long-term value.

Keywords:Employee online review;Employee satisfaction; Intangible asset; Stock market valuation; Firm performance

This article was officially published in the International Journal of Hospitality Management in April 2021, which is an English A-category award journal of the college, and Gao Baojun is the corresponding author of this article.

Link: https://doi.org/10.1016/j.ijhm.2020.102810