The Stock Performance of American Companies Investing in a Culture of Health

Abstract

Purpose: We investigated the relationship between companies' efforts to build internal (COH-INT) and external cultures of health (COH-EXT) and their stock performance.

Design: We administered 2 surveys, which measure companies' programs, policies, and supports for improving the health of their employees and communities. We then compared the companies' stock performance to the Standard and Poor's (S&P) 500 Index from January 2013 through August 2017.

Setting: United States.

Participants: Representatives from 17 publicly traded companies who completed the COH-INT survey, of whom 14 also completed the COH-EXT.

Measures: Culture of health scores were dichotomized into high versus low for both surveys. Stock price data for all companies were gathered from public sources.

Analysis: We constructed 5 stock portfolios: all 17 companies, high COH-INT, low COH-INT, high COH-EXT, and low COH-EXT companies. We examined total returns for each portfolio compared to the S&P 500.

Results: High COH-INT companies' stock price appreciated by 115% compared to the S&P benchmark (+69%), while low COH-INT companies appreciated only 43%. In contrast, high COH-EXT companies underperformed (+44%) when compared to the S&P 500 (+69%) and low COH-EXT companies (+89%).

Conclusion: This study supports the view that employers' efforts to build an internal culture of health is a sound business strategy. More research is needed, however, to establish whether a link exists between supporting healthy community initiatives and company stock performance.

Keywords: business case; community health; corporate social responsibility; culture of health; financial impact; stock price performance; workplace health promotion; workplace wellness.