Financial Misconduct and Changes in Employee Satisfaction

57 Pages Posted: 18 Oct 2019 Last revised: 23 Oct 2019

See all articles by Yuqing Zhou

Yuqing Zhou

University of California, Los Angeles (UCLA), Anderson School of Management, Students

Christos Makridis

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: October 10, 2019

Abstract

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

Zhou, Yuqing and Makridis, Christos, Financial Misconduct and Changes in Employee Satisfaction (October 10, 2019). Available at SSRN: https://ssrn.com/abstract=3467787 or http://dx.doi.org/10.2139/ssrn.3467787

Yuqing Zhou (Contact Author)

University of California, Los Angeles (UCLA), Anderson School of Management, Students ( email )

Los Angeles, CA
United States

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

Christos Makridis

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

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