Title: Financial Capital and Human Capital in American Corporations: How Ownership by Activist Hedge Funds and Index Investors Affects Employee Satisfaction
Abstract: Two major trends in the American capital market pull companies to both long-term and short-term orientation. The first trend is a growing concentration of ownership of public companies by institutional investors, and the second is a growing control of corporate boards by activist hedge funds. What do these trends mean for employee relations? I answer this question in my dissertation by studying all publicly traded US companies from 2008 to early 2018, and by using big data – firms’ annual reports and anonymous employer reviews on Glassdor.com. Additionally, I analyze the relationship between employee satisfaction and firms’ financial performance. The results of my analyses show that ownership by most activist hedge funds and large index funds do not have a direct effect on employee satisfaction. However, ownership by Gamco Investors, one of the most active hedge funds in terms of the number of campaigns, reduces employee satisfaction. The dissertation also finds that shareholders affect managerial attention, such that ownership by activist hedge funds increased managerial attention to shareholders, and ownership by large index funds reduced managerial attention to firms’ stock market performance. Finally, the results show that employee satisfaction is not the cause of firms’ financial performance, but rather the consequence of high firm performance. My dissertation contributes to corporate governance and human capital management literature.
Committee Members: Gerald Davis (Chair), Gretchen Spreitzer, Jim Westphal, Mark Mizruchi
Davis, G.F. & Kim, E.W. Social Movements and Organizational Change. Oxford Handbook of Organization Change and Innovation, 2nd Edition. Edited by Marshall Scott Poole and Andrew H. Van de Ven. Forthcoming. (pdf)
Kim, E.W. & Davis., G.F. How Passive are Passive Index Funds? The Impact of Market Giants on Index Firms’ Corporate Governance. Ready to be submitted. (pdf)
Kim, E.W. Impact of Activist Hedge Funds and Institutional Investors on Employees' Job Satisfaction. (Writing stage).
Uribe, J., Park, P., Briscoe, F. & Kim, E.W. Organizational Antecedents and Consequences of the #MeToo Movement: Employees’ Gender Concerns and Board Composition. (Data analysis stage)
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