Job satisfaction and investment efficiency

This thesis examines three related empirical studies on the effect of employee job satisfaction on investment efficiency among the top 100 firms in the United States. The first study investigates the relationship between job satisfaction and firms’ investment efficiency and further evaluates whether job satisfaction is associated with patterns of over- or under-investment. The findings indicate that a one-percent increase in job satisfaction is associated with an average increase of 0.05 percent in investment efficiency. This suggests that improvements in employee satisfaction across leading U.S. firms translate into more efficient allocation of corporate investment resources. This result aligns with the conclusions of Benjamin et al. (2003), who maintain that positive employee attitudes enhance organizational performance. With respect to mis investment behaviour, the results show that job satisfaction does not exert a statistically significant influence on either under-investment or over-investment. This outcome is unsurprising, given that decision-making authority over major investment policies in large U.S. corporations is typically concentrated among senior executives, with limited input from the wider workforce. This interpretation is consistent with Hsueh et al. (2022), who similarly report that employees outside top management rarely influence firm-level investment decisions. The second study examines the mediating role of institutional quality in the relationship between job satisfaction and investment efficiency. The findings indicate that higher levels of corruption control and government effectiveness significantly strengthen the positive association between job satisfaction and firms’ investment efficiency. This implies that institutional environments characterized by lower corruption and more effective public administration amplify the beneficial impact of job satisfaction on firms’ investment decisions. Such institutional conditions create greater stability, transparency, and predictability, thereby enabling firms to translate internal employee-oriented advantages into more efficient investment outcomes. These observations are consistent with Zhao and Xu (2015) and Waheduzzaman and Khandaker (2022), who argue that strong institutional frameworks enhance firms’ operational performance by reducing uncertainty and improving governance quality. Conversely, the interaction effects of regulatory quality and political stability with job satisfaction are not statistically significant. This suggests that even when employees report high levels of job satisfaction, suboptimal regulatory environments such as excessive bureaucratic constraints, inconsistent policy implementation, or restrictive compliance requirements may offset potential gains in investment efficiency. In such contexts, firm-level improvements in employee satisfaction alone may be insufficient to overcome broader institutional barriers to efficient resource allocation. The third study examines the relationship between the environmental and social (ES) engagement practices of U.S. firms and employee job satisfaction. In addition, the study evaluates whether firm size, financial leverage, and sales revenue moderate this relationship. The results show a positive and statistically significant association between ES practices and job satisfaction among the top 100 U.S. firms, indicating that stronger environmental and social commitments enhance employees’ perceptions of their workplaces. This finding is consistent with theoretical expectations that socially responsible practices improve employee morale, organisational identification, and perceptions of corporate integrity, thereby contributing to higher levels of job satisfaction. However, the moderating effects of firm size, financial leverage, and sales revenue are not statistically significant, suggesting that the positive influence of ES practices on job satisfaction operates relatively independently of firm-level structural characteristics. In other words, improvements in ES performance benefit employees across firms regardless of organisational scale, capital structure, or sales volume. This result aligns conceptually with Hu et al. (2018), who reported beneficial effects of socially responsible business practices, specifically a positive relationship between social responsibility and product value in Chinese manufacturing. Although their focus was on product value rather than job satisfaction, both studies indicate that ES-oriented strategies generate favourable internal and external outcomes for firms.