This research evaluates the impact of job satisfaction on the share price of companies listed on the Johannesburg Stock Exchange (JSE). Current HRM theory stipulates that job satisfaction can improve retention and employee motivation leading to accrued benefits for the shareholder (Edmans, 2011). In addition over the last few years, studies have shown the JSE to be inefficient as it does not react rapidly by setting its share price when provided with new qualitative news. This research was conducted as a longitudinal study of the relationship between job satisfaction and shareholder returns. This was done through a quantitative approach using a combination of an event based and style research methodology.
The results of this research confirms HRM theory that positive benefits accrued from investing in job satisfaction outweigh the cost. This is shown via a 4.1% pa return over an equal weighted index in the period 2008-2014. In addition the JSE was also shown to be inefficient, as the companies listed on the top employers were still obtaining abnormal returns 59 days after the announcement. The findings of this study thus provide valuable information to traders on the JSE on the returns of listed companies that invest in job satisfaction.