Preprint
The Information Environment of Firms with Worker Representation on Corporate Board
SSRN Electronic Journal
2023
DOI: 10.2139/ssrn.4626214
Abstract
We provide evidence that firms with worker representation on their board have more trans-parent information environments. We use a discontinuity in the German laws on worker repre-sentation for identification and find strong and consistent results that firms with worker rep-resentation are associated with smaller analyst earnings forecast errors. We identify several channels for the improved transparency, including more detailed management guidance and more detailed financial statement reporting. Moreover, we find that insider purchases in firms with worker representation are less opportunistic than in firms with no worker representation. Our evidence is consistent with economic theory that predicts worker representatives provide operational first-hand knowledge to the board, which translates to more transparency and less information asymmetry. Overall, our results indicate that firms with worker representation have a more transparent information environment and that worker representatives in the boardroom have an important informational role that reduces information asymmetries.
Details
- Title: Subtitle
- The Information Environment of Firms with Worker Representation on Corporate Board
- Creators
- Sascha Kieback - University of MünsterCristi A. Gleason - University of IowaMartin Thomsen - University of MünsterChristoph Watrin - College of Accounting
- Resource Type
- Preprint
- Publication Details
- SSRN Electronic Journal
- DOI
- 10.2139/ssrn.4626214
- ISSN
- 1556-5068
- eISSN
- 1556-5068
- Language
- English
- Date posted
- 2023
- Academic Unit
- Accounting
- Record Identifier
- 9984542160202771
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