Financial Disclosure Transparency and Employee Wages

The Financial Review, Forthcoming

47 Pages Posted: 23 Jan 2018 Last revised: 7 Jun 2022

See all articles by John (Jianqiu) Bai

John (Jianqiu) Bai

Northeastern University - D'Amore-McKim School of Business

Matthew Serfling

University of Tennessee

Sarah Shaikh

University of Washington - Department of Accounting; University of Washington - Department of Accounting; University of Washington - Department of Accounting

Date Written: June 7, 2022

Abstract

We test the hypothesis that less transparent financial disclosures are an undesirable firm attribute that increase the amount of information and unemployment risk that employees bear, resulting in a wage premium. Using establishment-level wage data from the U.S. Census Bureau, we document that firms with less transparent disclosures pay their employees more, especially when employees bear greater information acquisition costs, have more influence in the wage-setting process, and own more stock. Our results hold after utilizing instrumental variables and exploiting two quasi-natural experiments. Overall, our results suggest that disclosure choices can generate externalities on an important group of stakeholders.

Keywords: Transparency, Disclosures, Employee Wages, Management Forecasts, Readability

JEL Classification: M40, M41, J31

Suggested Citation

Bai, John (Jianqiu) and Serfling, Matthew and Shaikh, Sarah, Financial Disclosure Transparency and Employee Wages (June 7, 2022). The Financial Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3103237 or http://dx.doi.org/10.2139/ssrn.3103237

John (Jianqiu) Bai

Northeastern University - D'Amore-McKim School of Business ( email )

220 B RP
Boston, MA 02115
United States

Matthew Serfling (Contact Author)

University of Tennessee ( email )

Haslam College of Business
Knoxville, TN 37996
United States
865-974-1952 (Phone)

Sarah Shaikh

University of Washington - Department of Accounting ( email )

224 Mackenzie Hall, Box 353200
Seattle, WA 98195-3200
United States

University of Washington - Department of Accounting ( email )

224 Mackenzie Hall, Box 353200
Seattle, WA 98195-3200
United States

University of Washington - Department of Accounting ( email )

Seattle, WA WA
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
515
Abstract Views
3,347
rank
77,255
PlumX Metrics