Publication Type

Conference Paper

Publication Date

8-2015

Abstract

This paper examines the link between rank-and-file employees’ unemployment concerns and financial reporting opacity. Following Agrawal and Matsa (JFE, 2013), we use exogenous variations in state unemployment insurance benefits to capture changes to unemployment concerns. We find that when unemployment concerns are lower, there is less opaque financial reporting. This relation is stronger when workers face higher unemployment risk, labor union participation is high, and executives have higher equity incentives. Using Tobin’s Q to capture firm value, we also find that the economic rationale to engage in opaque financial reporting reduces when unemployment benefits are high. Our findings suggest that labor market policies have a significant, likely unintended, positive externality on corporate reporting.

Keywords

Opacity, Transparency, Financial Reporting, Unemployment insurance

Discipline

Accounting | Corporate Finance

Research Areas

Corporate Reporting and Disclosure

Publication

European Accounting Association 38th Annual Congress 2015, April 28-30, Glasgow; American Accounting Association Annual Meeting 2015, August 8-12

First Page

1

Last Page

47

City or Country

Chicago, IL

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

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