Crowdsourced Employer Reviews and Stock Returns

Journal of Financial Economics, Forthcoming

8th Miami Behavioral Finance Conference 2017

63 Pages Posted: 19 Jul 2017 Last revised: 3 Aug 2018

See all articles by T. Clifton Green

T. Clifton Green

Emory University - Department of Finance

Ruoyan Huang

Moody's Corporation - San Francisco Office

Quan Wen

Georgetown University - Department of Finance

Dexin Zhou

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance

Date Written: April 1, 2018

Abstract

We find that firms experiencing improvements in crowdsourced employer ratings significantly outperform firms with declines. The return effect is concentrated among reviews from current employees, stronger among early firm reviews, and also stronger when the employee works in the headquarters state. Decomposing employer ratings, we find the return effect is related to changing employee assessments of career opportunities and views of senior management. It is unrelated to work-life balance. Employer rating changes are associated with growth in sales and profitability and help forecast one-quarter ahead earnings announcement surprises. The evidence is consistent with employee reviews revealing fundamental information about the firm.

Keywords: Glassdoor, employee satisfaction, market efficiency

JEL Classification: G14

Suggested Citation

Green, T. Clifton and Huang, Ruoyan and Wen, Quan and Zhou, Dexin, Crowdsourced Employer Reviews and Stock Returns (April 1, 2018). Journal of Financial Economics, Forthcoming; 8th Miami Behavioral Finance Conference 2017. Available at SSRN: https://ssrn.com/abstract=3002707 or http://dx.doi.org/10.2139/ssrn.3002707

T. Clifton Green (Contact Author)

Emory University - Department of Finance ( email )

1300 Clifton Rd.
Atlanta, GA 30322-2710
United States
404-727-5167 (Phone)
404-727-5238 (Fax)

Ruoyan Huang

Moody's Corporation - San Francisco Office ( email )

405 Howard Street
Suite 300
San Francisco, CA 94105
United States
4158746553 (Phone)

Quan Wen

Georgetown University - Department of Finance ( email )

37th and O Street, NW
Washington D.C., DC 20057
United States

HOME PAGE: http://faculty.georgetown.edu/qw50

Dexin Zhou

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance ( email )

55 Lexington Avenue
New York, NY 10010
United States

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