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Crowdsourced employer reviews and stock returns

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  • Green, T. Clifton
  • Huang, Ruoyan
  • Wen, Quan
  • Zhou, Dexin

Abstract

We find that firms experiencing improvements in crowdsourced employer ratings significantly outperform firms with declines. The return effect is concentrated among reviews from current employees, stronger among early firm reviews, and also stronger when the employee works in the headquarters state. Decomposing employer ratings, we find the return effect is related to changing employee assessments of Career Opportunities and views of senior management. It is unrelated to work-life balance. Employer rating changes are associated with growth in sales and profitability and help forecast one-quarter-ahead earnings announcement surprises. The evidence is consistent with employee reviews revealing fundamental information about the firm.

Suggested Citation

  • Green, T. Clifton & Huang, Ruoyan & Wen, Quan & Zhou, Dexin, 2019. "Crowdsourced employer reviews and stock returns," Journal of Financial Economics, Elsevier, vol. 134(1), pages 236-251.
    • Handle: RePEc:eee:jfinec:v:134:y:2019:i:1:p:236-251
    DOI: 10.1016/j.jfineco.2019.03.012
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    More about this item

    Keywords

    Glassdoor; Employee satisfaction; Market efficiency;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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