Firm Reputation Following Financial Misconduct: Evidence from Employee Ratings

53 Pages Posted: 26 Oct 2018 Last revised: 3 Oct 2023

See all articles by Yuqing Zhou

Yuqing Zhou

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Christos Makridis

Stanford University; Institute for the Future (IFF), Department of Digital Innovation, School of Business, University of Nicosia; Arizona State University (ASU); Department of Veterans Affairs (VA)

Date Written: February 28, 2019

Abstract

Using data from Glassdoor between 2008 and 2016, we study the effect of the public announcement of financial misconduct on employees' perceptions of firms, managers, and their salaries. We find a 0.32 standard deviation decline in overall company ratings following the public announcement of misconduct. The effects are stronger among employees who have weaker bargaining power on the job market, such as non-college workers and shorter tenure workers. Moreover, the salaries of certain employee groups slightly increase during the period of misconduct and decrease for a few years after the misconduct announcement. We also find that employee ratings are helpful for predicting misconduct.

Keywords: Financial Misconduct, Firm Reputation, Employee Ratings

JEL Classification: G3, M4

Suggested Citation

Zhou, Yuqing and Makridis, Christos, Firm Reputation Following Financial Misconduct: Evidence from Employee Ratings (February 28, 2019). Available at SSRN: https://ssrn.com/abstract=3271455 or http://dx.doi.org/10.2139/ssrn.3271455

Yuqing Zhou (Contact Author)

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

HOME PAGE: http://www.yuqingzhou.com/

Christos Makridis

Stanford University ( email )

Stanford, CA 94305
United States

Institute for the Future (IFF), Department of Digital Innovation, School of Business, University of Nicosia ( email )

Nicosia, 2417
Cyprus

Arizona State University (ASU) ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

Department of Veterans Affairs (VA) ( email )

810 Vermont Avenue NW
Washington, DC 20420
United States

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

Paper statistics

Downloads
454
Abstract Views
3,088
Rank
108,863
PlumX Metrics