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In 2020, the U.S. Securities and Exchange Commission began requiring publicly traded companies to include information about their efforts to attract, develop, and retain workers as part of their annual disclosures. These newly mandated filings contain important nuggets about how companies are investing in people. And according to recent RAND research, this information can often predict stock performance.
RAND economists Jeffrey Wenger and George Zuo used AI to analyze SEC disclosures over more than 20 years, rate how every large public retailer disclosed investments in their frontline workers, and assessed how these data were connected to stock prices.
They found that retailers that made strong and specific disclosures about investing in workers saw their short-term stock prices increase anywhere from 2 percent (within two weeks of the disclosure) to 2.5 percent (within 30 days of the disclosure). Backing such companies could be a solid long-term play for investors, too.
The study's bottom line is clear, say Wenger and Zuo, and it should hit a nerve in today's market: “Companies that put their money where their mouth is, investing in their frontline workers, could see a nontrivial uptick in their financials if they were clearer and more direct about what they were doing.”
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