A New Era of Voluntary Disclosure? Empirical Evidence on How Employee Postings on Social Media Relate to Future Corporate Disclosures

67 Pages Posted: 3 Apr 2017 Last revised: 3 May 2018

See all articles by Jeffrey Hales

Jeffrey Hales

University of Texas at Austin - Department of Accounting

James Moon

Georgia Institute of Technology - Scheller College of Business

Laura Swenson

University of Wisconsin - Milwaukee

Date Written: March 11, 2018

Abstract

With the advent of social media, individual public opinions about firms can be more easily accessed and aggregated, and recent research suggests that various platforms, such as Twitter, Seeking Alpha, and Estimize, provide information relevant in predicting future corporate disclosures. Rather than focusing on the general public's opinion, we examine a public platform designed to convey insider information - Glassdoor.com, where employees voluntarily share their opinions on a number of issues, including the company's near-term business outlook. Using a sample of approximately 150,000 employee reviews, we extract both employees' explicit assessments of outlook and a measure of their latent outlook derived from factor analysis. We then examine whether the opinions employees share on social media relate to future corporate disclosures. In particular, we find evidence that employee opinions are useful in predicting growth in key income statement information, transitory reporting items (e.g., restructuring charges), earnings surprises, and management forecast news. While voluntary disclosures about firm performance have traditionally come from executives, our evidence suggests that rank-and-file employees are chipping away at upper-level management's exclusive control over that channel.

Keywords: Voluntary disclosure; social media; employee outlook; forecasting

JEL Classification: M40, M41, M12, M59

Suggested Citation

Hales, Jeffrey and Moon, James and Swenson, Laura, A New Era of Voluntary Disclosure? Empirical Evidence on How Employee Postings on Social Media Relate to Future Corporate Disclosures (March 11, 2018). Accounting, Organizations and Society, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2944309 or http://dx.doi.org/10.2139/ssrn.2944309

Jeffrey Hales (Contact Author)

University of Texas at Austin - Department of Accounting ( email )

Austin, TX 78712
United States
512-471-2163 (Phone)
512-471-3907 (Fax)

James Moon

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Laura Swenson

University of Wisconsin - Milwaukee ( email )

Bolton Hall 802
3210 N. Maryland Ave.
Milwaukee, WI 53211
United States

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