Contrary to management theories developed in the Industrial Age, employee satisfaction is an important ingredient for financial success, according to a new research paper by Wharton finance professor Alex Edmans . His findings also challenge the importance of short-term financial results and may have implications for investors interested in targeting socially responsible companies.

In a paper titled, “ Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices ,” Edmans examines the stock returns of companies with high employee satisfaction and compares them to various benchmarks — the broader market, peer firms in the same industry, and companies with similar characteristics.…