Publication Type
Working Paper
Publication Date
7-2015
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
Issue
2015-26
First Page
1
Last Page
47
Publisher
Singapore Management University
City or Country
Singapore
Citation
NG, Jeffrey; RANASINGHE, Tharindra; SHI, Guifeng; and YANG, Holly I..
Opaque Financial Reporting due to Unemployment Concerns. (2015). 1-47.
Available at: https://ink.library.smu.edu.sg/soa_research/1285
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.