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

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  • SVENJA DUBE
  • CHENQI ZHU

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.

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  • Svenja Dube & Chenqi Zhu, 2021. "The Disciplinary Effect of Social Media: Evidence from Firms' Responses to Glassdoor Reviews," Journal of Accounting Research, Wiley Blackwell, vol. 59(5), pages 1783-1825, December.
    • Handle: RePEc:bla:joares:v:59:y:2021:i:5:p:1783-1825
    DOI: 10.1111/1475-679X.12393
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    3. Xixiong Xu & Maochuan Wang, 2024. "Confucianism and employee treatment: Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 2649-2669, July.
    4. Tsang, Albert & Frost, Tracie & Cao, Huijuan, 2023. "Environmental, Social, and Governance (ESG) disclosure: A literature review," The British Accounting Review, Elsevier, vol. 55(1).
    5. Kim, Jonghwan (Simon) & Ra, Kyeongheum, 2022. "Employee satisfaction and asymmetric cost behavior: Evidence from Glassdoor," Economics Letters, Elsevier, vol. 219(C).
    6. Danni Wang & Qi Zhu & Bruce J. Avolio & Wei Shen & David Waldman, 2023. "Do employees' views matter in corporate governance? The relationship between employee approval and CEO dismissal," Strategic Management Journal, Wiley Blackwell, vol. 44(5), pages 1328-1354, May.
    7. Cai, Wenjing & Cai, Xinni & Wang, Zehao & Yang, Ge, 2023. "The spillover effect of penalty against peer firm leaders——Evidence from earnings management," Finance Research Letters, Elsevier, vol. 54(C).
    8. Daniel E. O'Leary, 2024. "Toward an extended framework of exhaust data for predictive analytics: An empirical approach," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 31(2), June.

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