Firms use positive financial news and press releases as a 'shield' to prevent their employees from being poached by larger competitors.
While corporate disclosures are usually intended for investors, this study shows that when a major employer like Amazon moves into a county, local firms start releasing significantly more optimistic, forward-looking reports. This isn't for the stock market; it is a strategic HR tactic to manipulate workers' perceptions of the company's future and reduce turnover.
When a Large Employer Comes to Town: Labor Market Entry and Corporate Disclosure
SSRN · 6395939
This paper examines how incumbent firms adjust their disclosure behavior in response to heightened labor market competition. Using announcements of large employer entries into local labor markets, I find that incumbent firms located in the affected counties increase the disclosure of positive, forward-looking information. This response is concentrated among incumbent firms that compete more directly with entrant firms for similar workers and is strongest in local labor markets where employee ret