I got a fairly interesting report on rate of CEO satisfaction and it how may impact stock returns based on UBS Evidence Lab. The research is fairly interesting, because if the guys at UBS are right, investors may need to look at alternative metrics beyond conventional fundamentals when picking stocks, like using Glass Door reviews for example. Here’s some of the highlights from the report:The high correlation (95-96%) between the perception of the CEO and senior management and the overall score awarded to an employer, led us to focus on leadership credentials and here we found evidence that those companies seeing the greatest improvement in internal reviews of leadership quality (CEO satisfaction), also tended to deliver outsized shareholder returns: The ten software companies that had the highest four-year improvement in CEO approval (through the end of 2015) enjoyed an average share price return of 121%. The bottom ten returned 35%.It is unsurprising that the younger "cloud-baby" companies were more likely to still be led by their founders. For founder-led companies (regardless of their generation) the overall company approval score averaged 3.83, while the CEO approval ranking was 79% (Figure 7). As a point of comparison the average for all the remaining companies was 3.58 and 73%. While it is hard to prove that they are better, founder CEOs seem more popular. In a nut shell, founder led companies tend to perform a little better on employee satisfaction surveys, and the most indicative of future returns is the perception of upper level management among the employee ranks. If the CEO is perceived as incompetent or there’s an absence of leadership, you’ll hear about it from the employees first. It’s also worth noting that senior management teams capable of producing stock returns tend to improve their satisfaction among employees as many of the employees within the company also have ownership of company stock via stock option awards. As such, it’s not yet clear if employee’s perception of management is either a lagging or forward looking indicator, because if I’m not mistaken the opinions of employees shifts based on market returns of the company stock. However, another behavior to observe is a trending relationship, which may imply that if a CEO is able to consistently improve his perceived value to employees we can use this as a leading indicator. In other words a form of regression analysis on employee surveys in conjunction with qualitative/fundamental factors can be used to derive a stronger basis for investing into a company. Based on the survey results here are the five most promising companies that are publicly traded on a U.S. based stock exchange:Palo Alto Networks (PANW) 97% CEO approvalTableau (DATA) 97% CEO approvalGuidewire Software (GWRE) 95% CEO approvalCornerstone OnDemand (CSOD) 94% CEO approvalSplunk (SPLK) 94% CEO approval Admittedly, I’m not familiar with any of these names as they’re outside of my coverage space. But among small mid cap names, I could see the potential. Looking over the names Tableau, Cornerstone on Demand, and Splunk have the lowest performance within the group, but have some of the highest CEO satisfaction scores. Therefore, I could see the change in perception among employees to be more forward looking and having higher correlation to future stock returns. Investors should look to do further due diligence on these companies as well. Software/networking is a great space depending on stock selection. Looking for smaller companies with favorable growth dynamics rather than searching for deep value tends to produce higher returns.