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  5. Corporate Culture, Firm-Worker Matching and Firm Performance
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Corporate Culture, Firm-Worker Matching and Firm Performance

Paper Session

Friday, Jan. 6, 2023 8:00 AM - 10:00 AM (CST)

Sheraton New Orleans, Rhythms III
Hosted By: American Finance Association
  • Chair: Elena Simintzi, University of North Carolina-Chapel Hill

Communicating Corporate Culture in Labor Markets: Evidence from Job Postings

Joseph Pacelli
,
Harvard Business School
Tianshuo Shi
,
Harvard Business School
Yuan Zou
,
Harvard Business School

Abstract

A company’s culture represents one of the most important factors that job-seekers consider
when choosing a job. In this study, we examine how firms craft their job postings to convey
their cultural values. We utilize state-of-the art machine learning methods to develop a
comprehensive dictionary of cultural values and examine the factors associated with job
postings communicating corporate culture. Our results indicate that the cultural information
conveyed in job postings is informative to job-seekers. Job postings communicate corporate
culture more prominently when traditional signals of corporate culture (such as job reviews)
are more positive. In addition, firms are more likely to communicate corporate culture in their
job postings when facing tight labor markets. The information conveyed in culture-oriented
job postings ultimately leads to more efficient hiring as it is associated with higher worker
inflows. Promoting culture in job postings also has a more pronounced effect on hiring
outcomes when workers have less access to credible information about the firm’s corporate
culture. Overall, our findings suggest that job postings are an important mechanism for
credibly communicating cultural values to prospective employees and improving cultural fit.

Disclosing Labor Demand

Gurpal Sran
,
New York University

Abstract

I study disclosure choices in job postings and the trade-off between two channels: detailed postings inform and attract optimal job applicants (i.e., a labor market channel) but could also inform competitors in labor and product markets (i.e., a proprietary costs channel). First, I provide evidence consistent with a proprietary costs channel: private firms and redacting firms are less specific in their postings, and postings are more often anonymous in industries with high levels of trade secrecy. Then, I exploit the introduction of federal trade secrecy protections (i.e., the Defend Trade Secrets Act, or DTSA) to assess the trade-off between the two channels. After the implementation of the DTSA, firms demand higher levels of skill in postings for innovative jobs, consistent with trade secrecy protections spurring innovative activities. However, job posting specificity decreases, in line with the proprietary costs channel, as trade secrecy protections are maximized when firms remain opaque regarding innovation. This decrease is attenuated for postings in tight labor markets, which is not only indicative of the importance of specificity in job postings, but also consistent with the proposed trade-off.

JAQ of All Trades: Job Mismatch, Firm Productivity and Managerial Quality

Luca Coraggio
,
University of Naples Federico II
Marco Pagano
,
University of Naples Federico II
Annalisa Scognamiglio
,
University of Naples Federico II
Joacim Tag
,
Research Institute of Industrial Economics

Abstract

Does the matching between workers and jobs help explain productivity differentials across firms? To address this question we develop a job-worker allocation quality measure (JAQ) by combining employer-employee administrative data with machine learning techniques. The proposed measure is positively and significantly associated with labor earnings over workers’ careers. At firm level, it features a robust positive correlation with firm productivity, and with managerial turnover leading to an improvement in the quality and experience of management. JAQ can be constructed for any employer-employee data including workers’ occupations, and used to explore the effect of corporate restructuring on workers’ allocation and careers.

Show Me the Amenity: Are Higher-Paying Firms Better All Around?

Jason Sockin
,
University of Pennsylvania

Abstract

Do firms that pay more offer better amenities, or does the greater pay compensate for worse amenities? Using matched U.S. employee-employer data, this paper estimates the joint distribution of wages, amenities, and job satisfaction across firms. Fifty amenities are captured applying topic modeling to workers' free-response descriptions of their jobs. Three main findings emerge. First, higher-paying firms offer better amenities. Second, employees value amenities: one-third have a more pronounced effect on satisfaction than pay. Third, since workers are willing to pay for satisfaction and because the covariance between amenities and wages is sufficiently high, amenities widen compensation dispersion across firms.

Discussant(s)
Kai Li
,
University of British Columbia
Gregor Schubert
,
University of California-Los Angeles
Isil Erel
,
Ohio State University
Geoffrey Tate
,
University of Maryland
JEL Classifications
  • G3 - Corporate Finance and Governance