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Announcement Effects Of Working Mother Annual Survey Of Family-Friendly Firms
Abstract
An increasing number of firms are adopting family-friendly policies as a means of improving morale and increasing the productivity of their workforce. Firms adopting such policies are often lauded for their concern for their workers. Beginning in 1986, Working Mother magazine began publishing an annual survey of the 100 best companies for working mothers to recognize those firms with exemplary family-friendly policies. Implementing family-friendly strategies can be quite costly. While workers may find these companies attractive, does the market find that the potential benefits of these programs outweigh their costs? In this article, the authors examine the stock market's reaction to firms that are listed on Working Mother's annual survey. They find that the market reacts negatively to announcements of firms that are included in the survey.
... Answers to the question of whether those advantages include better firm performance have been ambiguous (Romero, 2004). According to Filbeck and Preece (2003), who investigated the impact of the announcement of Working Mother's 100 best list on stock prices, found that the stock market perceived familyfriendliness as bad news. In other words, the market seems not to agree that economic and business benefits outweigh the costs associated with being family friendly (Filbeck & Preece, 2003). ...
... According to Filbeck and Preece (2003), who investigated the impact of the announcement of Working Mother's 100 best list on stock prices, found that the stock market perceived familyfriendliness as bad news. In other words, the market seems not to agree that economic and business benefits outweigh the costs associated with being family friendly (Filbeck & Preece, 2003). According to Fulmer et al.'s (2003) study, however, the time and money spent to create and support positive employee relations turned out to be a worthwhile investment. ...
... This seems to be one of the key reasons many companies submit applications to best employers studies. For example, a search of the Internet revealed that many companies put out their own news releases following the awards, and Working Mother provides links to the firms on its Working Mother Web site (Filbeck & Preece, 2003). This public reputation enables firms to attract potential talented employees. ...
This article explores the phenomenon of best employer studies, including origins, meaning, and implications of such studies through a literature review and a case study of Hewitt's Best Employers in Asia study. A conceptual model is suggested of the relationships among business strategy, HR practices, engaged employees, HR reputation, and financial performance, based on theoretical backgrounds, such as the resource-based view of the firm, strategic HR management, signaling theory, and social identity theory. Finally, implications for practice in HRD and for future research are presented.
... Answers to the question of whether those advantages include better firm performance have been ambiguous (Romero, 2004). According to Filbeck and Preece (2003), who investigated the impact of the announcement of Working Mother's 100 best list on stock prices, found that the stock market perceived familyfriendliness as bad news. In other words, the market seems not to agree that economic and business benefits outweigh the costs associated with being family friendly (Filbeck & Preece, 2003). ...
... According to Filbeck and Preece (2003), who investigated the impact of the announcement of Working Mother's 100 best list on stock prices, found that the stock market perceived familyfriendliness as bad news. In other words, the market seems not to agree that economic and business benefits outweigh the costs associated with being family friendly (Filbeck & Preece, 2003). According to Fulmer et al.'s (2003) study, however, the time and money spent to create and support positive employee relations turned out to be a worthwhile investment. ...
... This seems to be one of the key reasons many companies submit applications to best employers studies. For example, a search of the Internet revealed that many companies put out their own news releases following the awards, and Working Mother provides links to the firms on its Working Mother Web site (Filbeck & Preece, 2003). This public reputation enables firms to attract potential talented employees. ...
presented an earlier draft of this article at the 2005 annual conference of the Academy of Human Resource Development, in Estes Park, Colorado. We improved the article with helpful suggestions and feedback from the participants of the conference. We also extend our gratitude for guidance provided by the editors and anonymous reviewers. This article explores the phenomenon of best employer studies, including origins, meaning, and implications of such studies through a literature review and a case study of Hewitt's Best Employers in Asia study. A con-ceptual model is suggested of the relationships among business strategy, HR practices, engaged employees, HR reputation, and financial perfor-mance, based on theoretical backgrounds, such as the resource-based view of the firm, strategic HR management, signaling theory, and social identity theory. Finally, implications for practice in HRD and for future research are presented. More than 30 years ago, Lawler and Hackman (1971) asked, "Are corporate profit and employee satisfaction in conflict?" arguing that people have a pseudo-dilemma that "the economic benefits that derive from the simplifica-tion of work more than offset any possible costs associated with having dis-satisfied employees" (p. 47). At that time, their concern was the impact of scientific management. However, there seems to be general agreement that the bundle of low wages, low investment in human capital, and little career mobil-ity lead only to lower than average financial performance (Evans, Pucik, & Barsoux, 2002). Conversely, according to Levering (1996), a good workplace HRDR287515.qxd 4/7/2006 6:44 PM Page 228
... Answers to the question of whether those advantages include better firm performance have been ambiguous (Romero, 2004). According to Filbeck and Preece (2003), who investigated the impact of the announcement of Working Mother's 100 best list on stock prices, found that the stock market perceived familyfriendliness as bad news. In other words, the market seems not to agree that economic and business benefits outweigh the costs associated with being family friendly (Filbeck & Preece, 2003). ...
... According to Filbeck and Preece (2003), who investigated the impact of the announcement of Working Mother's 100 best list on stock prices, found that the stock market perceived familyfriendliness as bad news. In other words, the market seems not to agree that economic and business benefits outweigh the costs associated with being family friendly (Filbeck & Preece, 2003). According to Fulmer et al.'s (2003) study, however, the time and money spent to create and support positive employee relations turned out to be a worthwhile investment. ...
... This seems to be one of the key reasons many companies submit applications to best employers studies. For example, a search of the Internet revealed that many companies put out their own news releases following the awards, and Working Mother provides links to the firms on its Working Mother Web site (Filbeck & Preece, 2003). This public reputation enables firms to attract potential talented employees. ...
presented an earlier draft of this article at the 2005 annual conference of the Academy of Human Resource Development, in Estes Park, Colorado. We improved the article with helpful suggestions and feedback from the participants of the conference. We also extend our gratitude for guidance provided by the editors and anonymous reviewers. This article explores the phenomenon of best employer studies, including origins, meaning, and implications of such studies through a literature review and a case study of Hewitt's Best Employers in Asia study. A con-ceptual model is suggested of the relationships among business strategy, HR practices, engaged employees, HR reputation, and financial perfor-mance, based on theoretical backgrounds, such as the resource-based view of the firm, strategic HR management, signaling theory, and social identity theory. Finally, implications for practice in HRD and for future research are presented. More than 30 years ago, Lawler and Hackman (1971) asked, "Are corporate profit and employee satisfaction in conflict?" arguing that people have a pseudo-dilemma that "the economic benefits that derive from the simplifica-tion of work more than offset any possible costs associated with having dis-satisfied employees" (p. 47). At that time, their concern was the impact of scientific management. However, there seems to be general agreement that the bundle of low wages, low investment in human capital, and little career mobil-ity lead only to lower than average financial performance (Evans, Pucik, & Barsoux, 2002). Conversely, according to Levering (1996), a good workplace HRDR287515.qxd 4/7/2006 6:44 PM Page 228
... One may employ a general measure of CSR or focus upon one aspect of social performance, e.g. community-related, such as charitable giving (Brammer & Millington, 2005), environmental, such as pollution control (Derwall et al., 2004), or employee-related, such as maternity and paternity policies (Filbeck & Preece, 2003a). The authors of the latter study employ data from the 1998 US survey conducted by Fortune magazine in producing its list of "100 Best Companies to Work for in America." ...
... However, the same authors present somewhat contrary findings in a similar study of the "Most Family-Friendly Companies" survey published by Working Mothers magazine. There, they report a negative stock market response associated with the announcement date (Filbeck & Preece, 2003a). Despite the fact that Jones and Murrell (2001) report statistically significant positive abnormal returns associated with first-time inclusion in the Working Mothers list, the Fortune survey appears to have a superior impact on stock returns, which may be due to its wider readership. ...
... One may employ a general measure of CSR or focus upon one aspect of social performance, e.g. community-related such as charitable giving (Brammer and Millington, 2005), environmental such as pollution control (Derwall et al., 2004), or employee-related such as maternity and paternity policies (Filbeck and Preece, 2003b). Furthermore, one may identify CSR characteristics by grading against objective criteria through research of the company, its policies and performance (e.g. ...
... The authors conclude that "the stock market does value corporate concern for workers" and that their findings imply that "the market perceives that the positive benefits accruing to [the top 100] firms outweigh the costs of providing outstanding benefits [to their employees]." However, the same authors present somewhat contrary findings in a similar study of the 'Most Family-Friendly Companies' survey published by Working Mothers magazine, where they report a negative stock market response associated with the announcement date (Filbeck and Preece, 2003b). Despite the fact that another study (Jones and Murrell, 2001) reports statistically significant positive abnormal returns associated with first-time inclusion in the Working Mothers list, the Fortune survey appears to have a superior impact on stock returns, which may be due to the latter periodical being more widely read. ...
We consider the stock performance of America's 100 Best Corporate Citizens following the annual survey by Business Ethics. We examine both possible short-term announcement effects around the time of the survey's publication, and whether longer-term returns are higher for firms that are listed as good citizens. We find some evidence of a positive market reaction to a firm's presence in the Top 100 firms that are made public, and that holders of the stock of such firms earn small abnormal returns during an announcement window. Over the year following the announcement, companies in the Top 100 yield negative abnormal returns of around 3%. However, such companies tend to be large and with stocks exhibiting a growth style, which existing studies suggest will tend to perform poorly. Once we allow for these firm characteristics, the poor performance of the highly rated firms declines. We also find companies that are newly listed as good citizens and companies in the Top 100 but outside the S&P 500 can provide considerable positive abnormal returns to investors, even after allowing for their market capitalization, price-to-book ratios, and sectoral classification.
... The authors suggest that exemplary social performance can serve as a positive signal of the firm's business performance to shareholders. Conversely, Filbeck and Preece (2003) find a negative stock market response associated with the announcement. ...
Greening has become a powerful idea in corporate strategy. Firms engaged in greening often seek and cherish external validations such as being an active participant in UN’s Global Compact. This paper examines the investment performance of firms who were named in Newsweek's annual survey of most green companies. Results show that there is no direct relationship between a higher Newsweek Green Ranking and performance. However, firms after being named in the Newsweek survey had better return performance than in the year prior to being named although this difference in return was not statistically significant. The results are nonetheless important as it allows investors to separate good external validators of greening from those external validators who may have wide media recognition but are a perhaps a lagging indicator of greening.
... Over the 10-year period 1987-1996, lower riskadjusted returns are observed on the high family-oriented benefit portfolio. In a later study, Filbeck and Preece (2003) employ an event study methodology and report negative abnormal stock returns to family-oriented award announcements at the 1% level of significance. We put forth that union pension plans will focus their interests in CSP on its workplace practices dimension, aligning their investment in firms with favorable practices and encouraging the managements of existing portfolio firms to improve their practices. ...
This study examines overseas investing by U.S.-domiciled pension plans. The authors explore whether U.S. pension plans invest based on corporate social performance (CSP) in a core overseas market, the United Kingdom. As a guide to social investing opportunities available to U.S. pension funds in the United Kingdom, their investments are compared to U.K.-domiciled pension plan domestic investments. U.S. labor union plan portfolios have a positive relationship with workplace practices, and U.S. private plan portfolios, with CSP’s community dimension. U.S. state and foundation plan portfolios have no relationship with CSP. Other than union plans, U.S. pension plans stress corporate financial performance in their U.K. investments. U.K. union plan portfolios have a positive relationship with workplace practices, and U.K. state, foundation, and private plan portfolios with environment.
... These studies have used 'admired' companies in popular publications such as Fortune or popular books such as In Search of Excellence. Other studies have examined qualitative rankings of firms' social responsibility (McGuire et al., 1988) and the abnormal return at the announcement of Working Mother magazine's ranking of 'best' employers (Chauvin and Guthrie, 1994;Filbeck and Preece, 2003a). ...
We investigate the relationship between a firm's degree of social responsibility and its performance. To accomplish this objective, we examine the stock market reaction to the announcement of Fortune magazine's list of 100 Best Companies to Work For over the 1998-2003 period. We find significant positive excess returns, which indicate that being included on the list is viewed positively by the stock market. To explain the positive abnormal performance, we regress the excess returns against firm-specific variables. Excess return has a positive relation to the job growth rate, but not to firm rank, on a pre-listing basis. However, the additional analysis reveals that the firms with a more favourable ranking are relatively small and have a higher job growth rate, low employee turnover, high betas and extremely positive stock market performance prior to their inclusion on the list. In the year following the publication, sample firms with a favourable ranking have higher sales and gross profit margin than their lower-ranked counterparts. Overall, the results indicate that firms exhibiting a high degree of social responsibility towards their employees are positively rewarded by stock market participants, and that the rankings are somewhat related to pre- and post-survey financial performance.
This study investigates whether firm size moderates the relationship between cash conversion cycle and profitability over 8-year period for 285 German non-financial firms. The moderated regression results reveal that the relationship between cash conversion cycle and profitability is moderated by firm size. As the firm size gets smaller and the cash conversion cycle gets longer, the returns on assets decreases. When the firm size gets bigger and the cash conversion cycle gets longer, on the other hand, the returns on assets increases. In this context, reducing the length of cash conversion cycle has a positive impact on profitability for only small and medium-sized firms. Accordingly, this study concludes that small and also medium-sized firms, contrary to big firms, should reduce the length of cash conversion cycle in order to increase profitability.
In this study, we examine the relationship between the diversity efforts of firms listed in DiversityInc's list of Top 50 Companies for Diversity and their financial performance. We examine both an announcement effect and the risk-adjusted performance of diverse firms to a matched sample and the S&P 500 index. We find a positive effect related to the announcement of the DiversityInc Top Companies for Diversity list. When examining long-term performance using the risk-adjusted performance of listed companies, DiversityInc firms outperform the S&P 500 index but have performance that is either indistinguishable or inferior to a matched sample. DiversityInc firms exhibit superior return on assets compared to the matched sample, but this difference is explained by differences in firm size. Overall, we find limited support that inclusion in DiversityInc's list of top firms for diversity indicates improved performance over a matched sample.
Corporations making socially responsible investments have attracted considerable interest in the popular press over the past several decades. The impact of these decisions on corporate value and the intended beneficiaries is the subject of a substantial academic literature in management and economics, and a small but growing literature in finance. Researchers suggest five potential sources of long-term value from corporate social responsibility (CSR) focused investments. This chapter reviews the literature associated with each potential source of value, and concludes that the preponderance of evidence is consistent with the hypothesis that CSR-focused investments are associated with long-term value creation.
This study examines the extent to which corporate responsibility influences the demand for shares by institutions. The study
follows Bushee (Account Rev 73(3):305–333, 1998) in categorising institutions as dedicated or transient. The demand for shares is organised according to three factors: a
long-term factor, corporate responsibility; a short-term factor, market liquidity; and a time-independent factor, portfolio
theory. The rank and importance of the factors for the different types of institutional investor are analysed. For one of
two types of dedicated institution, corporate responsibility is as important as portfolio theory in influencing the demand
for shares. For all dedicated institutions, corporate responsibility influences the demand for shares more than market liquidity.
For two of the three types of transient institution, market liquidity is the most important factor in share selection. For
all transient institutions, the least important factor is corporate responsibility. Findings suggest that corporate responsibility
positively and significantly influences the demand for shares by dedicated institutions. The discussion considers the extent
to which these trends are constitutive of significant shifts in ethicality within the context of institutional investment.
Looking at this from within a highly institutionalised Anglo market model, dedicated institutions’ commitment to broader and
longer-term concerns could be interpreted as a small but significant step towards a more axiologically informed ethical business
practice. Such a form of engagement calls for sensitive attention to a fuller range of features deemed to be relevant to investment
decisions, as opposed to more narrow reliance on legislation, codes of practice and fiduciary principles.
Keywordsshare ownership–corporate responsibility–institutional investment–business ethics
The four refereed journal articles and one government research report that form the core of this submission for a PhD represent my work in the subject area of institutional investment and responsible investing. The research, as a whole, has two major areas of focus. One area of focus is the behaviour of institutional investors. The research first examines different types of institutional investor and their demand for the characteristics of social and environmental performance within their equity portfolios. The research next examines the fund managers that institutional investors appoint to manage their assets. Attention is paid to the different locations of fund management as well as the features that determine the degree of competition between fund managers. The research examines these different fund management settings and the demand for the characteristics of social and environmental performance within their equity portfolios. A further issue investigated is whether different types of institutional investor pay greater attention to responsible investment when investing domestically than overseas. The second area of focus is the study of responsible investment based on grounded research methods. The main contributions are an assessment of how fund managers perceive that responsible investment achieves financial performance, the communication between fund managers and corporate directors for the purpose of responsible investment, the use of information and staff within responsible investment, and costs and charges associated with responsible investment. Both areas have contributed to policy debates and development, and have prompted other researchers to publish and undertake fieldwork. The commentary, which forms Part A of this submission, illustrates these features by reference to the five publications that are reproduced in their entirety in part B.
Abstract In this paper we,examine,the returns to a portfolio of 29 firms,that are perceived,as family-oriented. The sample,is based on firms,awarded,the best 100 companies,for working mothers,in Working,Mother,Magazine’s annual,survey. There is much,anecdotal,evidence supporting the benefits of these programs, but little evidence relating family-oriented policies to shareholder wealth. We find, based on raw returns, that family-friendly firms do not earn statistically significant excess returns relative to a matched,sample or to th eS&P,500. Based on risk-adjusted returns, the family-friendly portfolio outperforms the market, but underperforms a matched,sample portfolio. © 1999 Elsevier Science Inc. All rights reserved. JEL classification:G10; G11 Keywords: Family friendly firms; Portfolio returns; Risk-adjusted returns
This paper examines a sample of firms experiencing proxy contests for seats on their board of directors. Dissident shareholders usually fail to obtain a majority of board seats. Nevertheless, they capture some seats, via mechanisms such as cumulative voting, in over half of the sample contests. Regardless of proxy contest outcome, positive and statistically significant share price performance is associated with the contest. That finding is predicted by the standard economic analysis of proxy contests, in which the challenges benefit shareholders by improving corporate performance. The finding runs counter to the claim of Berle (1962) that the economists' view of proxy contests is ‘a wholly imaginary picture’. A portion of the positive share price changes taking place in the early stages of some proxy contests is not permanent, however, and as suggested by Manne (1962) is at least partially attributable to temporary increases in the market value of the vote attached to corporate shares.