Intangible asset value of employee satisfaction in high-contact services

Publication Type

Journal Article

Publication Date

4-2021

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-contact 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

Discipline

Databases and Information Systems | Organizational Behavior and Theory | Portfolio and Security Analysis

Research Areas

Information Systems and Management

Publication

International Journal of Hospitality Management

Volume

94

First Page

1

Last Page

12

ISSN

0278-4319

Identifier

10.1016/j.ijhm.2020.102810

Publisher

Elsevier

Copyright Owner and License

Authors

Additional URL

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

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