Financial Misconduct and Changes in Employee Satisfaction
57 Pages Posted: 18 Oct 2019 Last revised: 23 Oct 2019
Date Written: October 10, 2019
We use Glassdoor data to study the effects of the public announcement of financial misconduct on employees' perceptions of firms and managers. We find a 0.32 standard deviation decline in employees' overall company ratings and 0.14 to 0.40 standard deviation declines in ratings of career opportunity, compensation benefit, senior leadership, work-life balance, culture value, and recommendation. Additional analysis shows that long-term reputation damage is likely to be the main economic channel behind the findings. Moreover, we further assess whether employee ratings are helpful in predicting misconduct. During the years of the misconduct period, employees who are more likely to have private information lowered their ratings. Such employees' ratings help predict misconduct.
Keywords: Financial Misconduct, Employee Satisfaction, Misconduct Predicting
JEL Classification: G3, M4
Suggested Citation: Suggested Citation