The Disciplinary Effect of Social Media: Evidence from Firms' Responses to Glassdoor Reviews

58 Pages Posted: 14 Jul 2021

See all articles by Svenja Dube

Svenja Dube

City University of NY, Baruch College, Zicklin School of Business

Chenqi Zhu

University of California, Irvine - Paul Merage School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: June 29, 2021

Abstract

We examine how firms respond to the increased workplace transparency due to the coverage on Glassdoor.com, which collects and disseminates reviews on employee satisfaction. Leveraging the staggered timing of first-time reviews on Glassdoor, we use a difference-in-differences design and find that after being reviewed on Glassdoor, firms improve their workplace practices, measured by corporate social responsibility scores on employee relations and diversity. Consistent with firms improving their workplace practices to remain competitive in the labor market, we find that such improvement concentrates in firms with negative initial reviews and with high labor intensity. We also find firms increase disclosures about workplace practices after being reviewed and the increase concentrates in firms with high institutional ownership, consistent with firms providing more disclosures to appease investors. Overall, our findings suggest that the increased workplace transparency through social media has a disciplinary effect on corporate policies.

Keywords: Social media, real effect, workplace practices, CSR disclosure

JEL Classification: M41, M14, J28, L86, J50

Suggested Citation

Dube, Svenja and Zhu, Chenqi, The Disciplinary Effect of Social Media: Evidence from Firms' Responses to Glassdoor Reviews (June 29, 2021). Available at SSRN: https://ssrn.com/abstract=3877022 or http://dx.doi.org/10.2139/ssrn.3877022

Svenja Dube

City University of NY, Baruch College, Zicklin School of Business ( email )

One Bernard Baruch Way
New York, NY 10010
United States

Chenqi Zhu (Contact Author)

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States

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

Paper statistics

Downloads
589
Abstract Views
2,033
Rank
95,952
PlumX Metrics