Yes, it does. It also affects combat efficiency and energy drain (a high moral merc is like a machine suped up on caffeine).

I'm actually thinking about writing a primer or morale and likes/dislikes for the benefit of certain JA2 players.

Too many people I've seen seem to have this misguided notion that morale and likes/dislikes only affects mercs comments and serves as a story point (with a few notable exceptions). So they end up putting Biff and Razor in the same squad or Lynx and Buzz in the same squad without thinking of the consequences.

- John