Svenja Dube, PhD, Assistant Professor of Accounting and Taxation

After a particularly rough week at work, who hasn’t imagined telling their boss exactly how they really feel about being overworked or underappreciated? But even when employers ask for feedback, most employees don’t feel comfortable giving an honest answer for fear it will put their jobs at risk.
Now, however, many current and former employees are using the popular website Glassdoor to open up about their personal work experiences and provide honest company reviews—protected by complete anonymity. According to recent research by Svenja Dube, PhD, assistant professor of accounting and taxation at the Gabelli School, in addition to giving employees a safe venue to express their views, companies are using the feedback to improve workplace practices and increase workplace-related disclosure in their financial reporting.

The aim of the paper, “The Disciplinary Effect of Social Media: Evidence from Firms’ Responses to Glassdoor Reviews,” which Dube co-authored with Chenqi Zhu, PhD, assistant professor of accounting at the University of California Irvine, was to get a read on companies’ initial reactions to candid employee feedback. “All of a sudden, everyone can see what at least one employee thinks about that firm,” Dube said. “We were interested to see if employee disclosure by itself would trigger firms to become better.”

The answer is that it did, in specific contexts. The researchers looked at up to the first 10 Glassdoor reviews of more than 2,700 companies and found that only those firms that received initial negative reviews took measures to improve their workplace practices. What’s more, improvements in workplace practices were more concentrated among firms that were competing for top talent, while improvements in workplace disclosures were concentrated in firms facing investor pressure. The latter finding aligns with previous research that revealed investors trade on Glassdoor reviews because poor workplace practices can negatively affect shareholder perception, and consequently, a company’s value. Dube pointed out that Glassdoor reviews are also useful in helping managers and HR professionals attract and retain talent by making it possible to keep tabs on what other companies are doing and to identify what employees actually value.

In terms of voluntary disclosure, what is unique about Glassdoor is that it’s not the firm deciding to provide the information, but rather the employees. “The thing that we were really excited about is that this research shows that the market can discipline management behavior,” Dube said. “You don’t necessarily need regulation for firms to improve their corporate culture. All you need is stakeholder pressure—in this situation, from the employees.”

The paper, which was awarded a CSR Fellowship by the Gabelli School, has been accepted for publication in the Journal of Accounting Research and already ranks in the top 10 recently downloaded papers in multiple categories on the Social Science Research Network (SSRN).

The findings send a valuable message to employees: “You have a voice, and it has an impact,” Dube said. “I feel like Glassdoor leveled the playing field a bit by giving employees a platform.”

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