This study aims to examine the market reaction to, and the performance of companies recognized for extensive remote-work opportunities. To identify firms that offer extensive remote work prospects for potential employees, the authors use the Virtual Vocations “Top 100 Companies to Watch for Fully Remote Jobs” list, published annually since 2016, to determine whether top remote work firms outperform unranked companies on both short-term and long-term bases.
This paper uses event study methodology including calculating abnormal returns and cumulative abnormal returns, and raw- and just-adjusted returns for the sample compared to market returns and matched samples. In addition, regression-based analysis for the Carhart four-factor and Fama–French five-factor models, a buy and a hold abnormal returns model. Profitability measures [return on equity (ROE) and return on assets (ROA)] are included.
The authors find that the announcement effect for listed firms is negative. The authors find limited evidence that long-term raw and risk-adjusted returns outperform matched samples, and in some cases, the S&P 500 and Russell 2000 indices. ROA and ROE experience decreases of 3.55 and 8.48 percentage points, respectively, in the year following the ranking. The authors do find that smaller firms that offer extensive remote work opportunities may achieve superior long-term performance, as evidenced by both raw and risk-adjusted returns. The more positive returns associated with remote work may be due to better monitoring, control and the ability to manage the performance of fully remote workers in smaller companies.
These mixed results are promising for remote work and additional research. The COVID-19 pandemic changed work dynamics and showed that many companies can function effectively in a remote work environment, particularly those in the Information Technology, Health care and Financial sectors. As technological developments advance, the work landscape will likely continue to evolve. The findings indicate some support for superior long-term performance in raw and risk-adjusted returns for those firms embracing remote work, which bodes well for the future.
