During my first semester in grad school, I was working an inside sales job at an advertising agency that specialized in advertising job openings. One question that popped into my head while I was eating lunch was, “When companies are hiring more people, does that mean they are performing better? If it does, does will that be reflected in the companies stock price?” This question lingered in my head and when it came time to choose a problem to solve for our statistics project, I chose to investigate this.
Given my limited data processing abilities at the time, I chose to select 35 of the 505 ticker symbols from the VOO index fund by assigning each a number and running a random number generator to select 5 random numbers, throwing out any stocks that were identical (google has multiple tickers in VOO for instance).
Linkedin was used to approximate the number of employees at each of the 35 companies each month over the course of one year beginning in October 2017 and ending in September 2018.
Yahoo Finance was used to determine the average of each of the 35 listed company’s stock prices in each month over the same time period.
With a P value of <0.0001 I was able to reject the null hypothesis that there was not a correlation between stock price and employee headcount. This means that we accept the alternative hypothesis that there is a close relationship between an increasing company headcount and an increase in it’s stock price.
CLICK HERE to download a copy of this project