Corporate Culture and Financial Reporting Risk: Looking Through the Glassdoor

Ji, Yuan; Rozenbaum, Oded; Welch, Kyle

doi:10.2139/ssrn.2945745

Cited by 28 publications

(29 citation statements)

References 43 publications

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“…First, in line with previous research in this strand that make use of online reviews (Chang et al, 2018;Huang et al, 2015;Ji et al, 2017;;Symitsi, Stamolampros, Daskalakis, & Korfiatis, 2018), I find that overall employee satisfaction is positively associated with firm performance after controlling for firm characteristics, industry, and time fixed-effects in System-GMM regressions. Among the four alternative performance indicators used for robustness purposes, the results are particularly consistent for return on equity (ROE) and growth in the ranking position in the prior two years (Growth).…”

Section: Introductionsupporting

confidence: 83%

“…In the past few years, though, the emergence of career community websites that provide crowd-sourced reviews of companies by thousands of employees has allowed more accurate assessments of workers' satisfaction. As a result, a literature aiming to assess the value relevance of human capital based on these sources of information has flourished in the past few years (Chang, Oh, & Park, 2018;Grennan, 2013;Huang, Meschke, & Guthrie, 2015;Ji, Rozenbaum, &Welch, 2017;Symitsi, Stamolampros, Daskalakis, & Korfiatis, 2018). This paper fits into this emerging literature.…”

Section: Introductionmentioning

confidence: 88%

“…It is important to highlight that my choice of firm characteristics used as control variables was based on the previous literature most closely related to our paper (Chang et al, 2018;Huang et al, 2015;Ji et al, 2017;Symitsi, Stamolampros, Daskalakis, & Korfiatis, 2018) and on a rationale linking them to both variables of interest. Larger firms, for example, are likely to have more resources to spend on employee benefits and workplace amenities, which may influence employee satisfaction.…”

Section: Control Variablesmentioning

confidence: 99%

See 2 more Smart Citations

The Employee Is Always Right: Employee Satisfaction and Corporate Performance in Brazil

Silveira

2019

Rev. adm. contemp.

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I investigate the effect of employee satisfaction on corporate performance based on an extensive dataset of 114,004 online reviews of Brazil’s 1,000 largest listed and unlisted firms from 2013 to 2018 posted at a local subsidiary of Glassdoor. I find that overall employee satisfaction is positively associated with firm performance and that this relationship is likely to be economically relevant. Among the four dimensions of employee well-being, the link with performance is most evident for the dimension on culture, followed by career opportunities. On the other hand, the dimension on compensation and benefits was the least connected with firm performance. Taken together, these results support the view that intrinsic motivators are more relevant for superior performance than extrinsic ones popularized by the carrot and stick approach to management. I also find that the influence of employee satisfaction on performance is likely to be asymmetrical, in the sense that workplaces characterized by low satisfaction among workers are more likely to lead to poor performance than best-in-class companies are likely to produce superior performance. To my knowledge, this is the first paper to document an asymmetrical link between firm value and employee satisfaction, as well the first one to investigate this issue in an emerging economy using online reviews.

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Section: Introductionsupporting

confidence: 83%

Section: Introductionmentioning

confidence: 88%

Section: Control Variablesmentioning

confidence: 99%

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The Employee Is Always Right: Employee Satisfaction and Corporate Performance in Brazil

Silveira

2019

Rev. adm. contemp.

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“…Prior studies use Glassdoor.com ratings in different contexts. Ji, Rozenbaum, and Welch (2017) find that Glasdoor ratings of employers and managers predict financial misreporting. They attribute this relation to employee perceptions representing corporate culture.…”

Section: Hypothesis Developmentmentioning

confidence: 92%

The Effects of Tax Avoidance News on Employee Perceptions of Managers and Firms: Evidence from Glassdoor.com Ratings

Lee

Shevlin

et al. 2020

SSRN Journal

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We examine whether employee perceptions of managers and firms fall following tax avoidance news. Using S&P 500 firms and generalized difference-indifferences specifications, we find that tax avoidance news negatively affects employee perceptions of managers and firms. In cross-sectional tests, we find that (1) firms and managers in consumerfacing industries suffer larger employee-related perception changes from tax avoidance news compared to other firms, and (2) well-performing firms and their managers face smaller perception changes than other firms and managers. Overall, our results are consistent with tax avoidance news negatively affecting employee perceptions of managers and firms.

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“…Keung et al (2010) report an increase in meeting or beating analyst forecasts over time, while Gilliam et al (2015) find less of a decrease relative to other benchmarks. However, investors and analysts are increasingly skeptical of earnings that just meet or barely beat forecasts (Ji, Rozenbaum, and Welch 2017), as noted by significantly lower earnings response coefficients for these earnings relative to other earnings releases since the early 2000s (but not in prior years; Keung et al 2010). We examine a potential implication of this skepticism.…”

Section: Introductionmentioning

confidence: 94%

Managing Earnings to Appear Truthful: The Effect of Public Scrutiny on Exactly Meeting a Threshold

Stirnkorb¹

2020

Preprint

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The past two decades have not eliminated managers' willingness to manage earnings to meet and beat earnings thresholds, but have increased investors' skepticism of earnings that exactly meet those thresholds. Using a low-external-context experiment, we find that managers avoid exactly meeting a benchmark, even when they alter true earnings to do so. Thus, we examine a new incentive to manage earnings: misreporting to appear truthful. Specifically, we examine the effect of intensified scrutiny of managers and managers' individual sensitivity and concern about investors' perceptions of them. We find that when earnings exactly meet a benchmark, managers are more likely to misreport earnings when they report under high public scrutiny. This is particularly the case for managers who are low on the Dark Triad scale (and thus more sensitive to others' perceptions). Further, we show that this misreporting increases managers' belief that the market will accept their reports, consistent with managers misreporting for self-presentational goals. These results help explain otherwise undetectable behavior around earnings benchmarks and are important as managers are increasingly scrutinized by critical media, activists, and political oversight bodies, and as they face skepticism via more intimate forms of disclosure and communication, such as social media.

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Corporate Culture and Financial Reporting Risk: Looking Through the Glassdoor

Cited by 28 publications

References 43 publications

The Employee Is Always Right: Employee Satisfaction and Corporate Performance in Brazil

The Employee Is Always Right: Employee Satisfaction and Corporate Performance in Brazil

The Effects of Tax Avoidance News on Employee Perceptions of Managers and Firms: Evidence from Glassdoor.com Ratings

Managing Earnings to Appear Truthful: The Effect of Public Scrutiny on Exactly Meeting a Threshold

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