This study documents for the first time that firms' reliance on alternative work arrangements is associated with superior long-horizon stock market returns beyond what can be explained by other systematic risk factors.
By constructing portfolios at the end of the month in which the ranking is published by Forbes, we document that portfolios of firms engaging in this strategy display a significant outperformance, which appears to be robust to a wide array of specifications.
Alternative work arrangements - and, in particular, WFH provisions - might result in superior stock market performance if (1) they yield productivity gains through their effect on employees wellbeing and on operational efficiency and flexibility, and (2) if such an effect is not immediately priced by the market.
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