Employee satisfaction and the cost of corporate borrowing

Wentao Chi and Yun Chen

Finance Research Letters, 2021, vol. 40, issue C

Abstract: This study identifies a channel through which stakeholders affect a firm's financing activities. We use employee reviews on Glassdoor.com, a major employer rating platform, to gauge the employee satisfaction of U.S.-listed firms. Using text-based sentiment measures based on 644,280 reviews over 11 years, we find the cost of debt financing is significantly higher for firms with low employee ratings and firms with negative employee sentiment in comments. The results are robust to a system GMM approach that alleviates endogeneity concerns. Our results suggest employee satisfaction improve financing conditions by signaling better growth potential and reducing agency conflicts with banks.

Keywords: Employee satisfaction; Corporate social responsibility; User generated data; Stakeholder theory (search for similar items in EconPapers)
JEL-codes: G32 J59 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:40:y:2021:i:c:s1544612319314175

DOI: 10.1016/j.frl.2020.101666

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