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The workforce watchdog: retail investor activism and labor investment efficiency

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  • Wang, Maochuan
  • Hong, Tao

Abstract

This study introduces a novel measure of retail investor activism on labor issues through Chinese investor interactive platforms and examines its impact on corporate labor investment efficiency. We document that retail investor labor activism (RILA) reduces suboptimal labor investment. To establish causality, we employ a comprehensive empirical strategy incorporating multiple fixed effects, alternative variable specifications, and difference-in-differences analyses. Moreover, strengthening supervision (both private and public monitoring) and alleviating financing constraints are two potential mechanisms. Cross-sectional analyses show that the baseline effect is more pronounced among firms with higher-quality interactions and greater knowledge intensity. Decomposition tests reveal that RILA primarily constrains over-hiring and under-hiring. Overall, we highlight that social media promotes democratized corporate governance, shifting retail investors from passive capital providers to active participants in labor allocation.

Suggested Citation

  • Wang, Maochuan & Hong, Tao, 2026. "The workforce watchdog: retail investor activism and labor investment efficiency," Journal of Contemporary Accounting and Economics, Elsevier, vol. 22(2).
    • Handle: RePEc:eee:jocaae:v:22:y:2026:i:2:s1815566926000214
    DOI: 10.1016/j.jcae.2026.100558
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