Revisiting the Performance of Firms Recognized for Creating a Healthy Culture

Abstract

Objective: To augment several prior JOEM studies, which associated firms with recognized health and safety programs with outsized firm stock performance. Methods: Stock performance of CHAA and C. Everett Koop National Health Award winners are analyzed using standard asset-pricing, risk-adjusted modeling to compare them against benchmark stock portfolios. Results: While wellness programs are laudable, the firms did not universally outperform a market benchmark over extended periods when controlling for well-established measures of portfolio risk. Conclusions: Investors could have also expected to underperform the market based on the excess risk involved with these selected companies. Investors must recognize that adding these award-winning companies to their portfolios also increases the overall riskiness and volatility of their portfolios. The previously documented outsized returns could be the reward for bearing this additional risk. JEL categories: G11, G51, J26, J32.