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Opaque Financial Reporting Due To Unemployment Concerns, Jeffrey Ng, Tharindra Ranasinghe, Guifeng Shi, Holly I. Yang
Opaque Financial Reporting Due To Unemployment Concerns, Jeffrey Ng, Tharindra Ranasinghe, Guifeng Shi, Holly I. Yang
Research Collection School Of Accountancy
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 …
Opaque Financial Reporting Due To Unemployment Concerns, Jeffrey Ng, Tharindra Ranasinghe, Guifeng Shi, Holly I. Yang
Opaque Financial Reporting Due To Unemployment Concerns, Jeffrey Ng, Tharindra Ranasinghe, Guifeng Shi, Holly I. Yang
Research Collection School Of Accountancy
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 …