This study investigates the association between corporate social responsibility (CSR) and the informativeness of employee-shared information. Focusing on employee reviews for U.S. publicly-listed firms from Glassdoor.com, we find a significantly positive association between firms’ CSR performance and the magnitude of market reactions to these reviews. The results hold across various robustness tests. Channel analyses demonstrate that this positive association is due to reviews for firms with stronger CSR performance providing a greater volume of information and being perceived as more credible. Moreover, employee ratings for firms with stronger CSR performance exert greater influence on stock prices, are less likely to be overly optimistic, decline more sharply following irresponsible social practices, and better predict future operating performance. Review sentiment for these firms also exerts a stronger impact on stock prices. Textual analyses of employee reviews further indicate that a socially responsible culture is considered important in firms with strong CSR performance and is positively associated with the magnitude of market reactions to those reviews. The main results hold using an alternative sample of employee reviews for Chinese publicly-listed firms. Collectively, these findings suggest that strong CSR performance reflects a socially responsible culture that fosters more informative disclosures by employees.
Zhai et al. (Sat,) studied this question.