DescriptionThis doctoral dissertation explores the nature of information available to firms’ non-executive
employees in two chapters. The first chapter examines whether employees, as a group, possess
valuable information about their firms that outside investors and even their managers may not
have? In the first chapter we isolate employee opinions (Glassdoor data) from those of stock
market participants by focusing on private firms that subsequently go public. Employees’ pre-IPO
views are informative: positive views on firm quality predict stronger post-IPO stock-performance.
In addition, dispersion in employee opinions correlates with post-IPO return volatility. Somewhat
surprisingly, employee satisfaction (e.g., work-life-balance) is negatively related to firm performance,
after controlling for opinions on firm quality. Negative initial-day stock returns depress employees’
views regarding firm quality: hence, leaving ‘money-on-the-table’ helps avoid a loss of employees’
morale.
In the second chapter we test whether employees continuously provide reliable non-public information
about their firms? Using textual analysis of Glassdoor data we show that employee opinions,
at least in aggregate, are continuously informative about their firms and are positively associated
with future firm performance and value. Following Quiet life hypothesis, employee-satisfaction (e.g.,
work-life-balance & compensation) is negatively related to firm performance, when we control for opinions on firm quality. We also show that employee opinions are more valuable in the presence
of greater complexity and uncertainty. In addition, dispersion in employee opinions correlates with
concurrent and future stock volatility. We also find there is a positive (negative) relation between
change in firm size and employees’ view about firm quality (employee satisfaction, controlling for
firm quality). Textual analysis also indicates that employees’ negative and uncertain tone about
their firm is negatively related to firm value and predictive of future stock volatility. Finally, we show
that firms’ performance is the main employees’ motivation to provide extended textual disclosure
about their firm.