Financial Reporting Quality and Wage Differentials: Evidence from Worker-Level Data

• 成果类型: Article
• 署名作者: Choi, Jung Ho; Gipper, Brandon; Malik, Sara
• 署名单位: Stanford University; Utah System of Higher Education; University of Utah
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12477
• 发表日期: 2023
• 页码: 1109-1158
• 关键词: internal control; Accounting information; unemployment-insurance; performance-measures; earnings management; LABOR; INVESTMENT; accruals; FIRMS; determinants

摘要

We examine whether financial reporting quality affects worker wages using employer-employee matched data in the United States. We find that low financial reporting quality is associated with a compensating wage differential-that is, a risk premium-using three distinct approaches while controlling for worker characteristics by (1) regressing wages on firm-year-level and firm-level reporting quality, (2) documenting wage changes when workers switch firms, and (3) estimating a structural approach that separates reporting quality from performance-related volatility. We find evidence consistent with two channels: performance pay and turnover risk, where workers bear risks from noise in performance measurement and unemployment, respectively. To mitigate endogeneity concerns, we show that-after the accounting scandals in 2002 and after the announcements of an internal control weakness (ICW)-former Arthur Andersen clients and ICW firms pay wage premiums to employees, with magnitudes between 0.9% and 2.8% of annual wages.