Pay attention to what your employees are saying!

What Do Employees Know? Evidence from a Social Media Platform

Kelly Huang (Florida International University), Meng Li (University of Texas at Dallas) and Stanimir Markov (University of Texas at Dallas) study the information content of employee social media disclosures from Glassdoor.com. Using over 500,000 employee predictions containing their companies’ six-month business outlook, they find that the average employee outlook is incrementally informative in predicting the respective firm’s future operating performance. Its information content of the outlook is better the more disclosures are aggregated from a larger, more diverse, more knowledgeable employee base. Also, employee social media disclosures are relatively more important as a source of bad news. Average outlook also helps to predict future returns of firms that attract less attention by analysts and investors.

Read full paper “What Do Employees Know? Evidence from a Social Media Platform” by Kelly Huang, Meng Li and Stanimir Markov, The Accounting Review (Vol. 95, No. 2, pp. 199-226.) at SSRN.