Aug 2026· Managerial Finance· pp. 1-18· 0 citations· 41 references
TL;DR
This study investigates whether employee sentiment from Glassdoor reviews is related to stock returns and demonstrates that textual analysis provides a viable method for the examination of employee sentiment, and refines the link between employee satisfaction and asset pricing.
Abstract
This study investigates whether employee sentiment from Glassdoor reviews is related to stock returns. Prior research relies on raw star ratings, but we show these measures are biased due to a 2012 change in Glassdoor's review process and a subsequent upward drift in scores.
We compile over two million Glassdoor reviews for Russell 3,000 firms from 2008–2019. Using multinomial inverse regression, we estimate sentiment directly from review text to address star rating biases. We then form value-weighted stock portfolios sorted on changes in sentiment.
Portfolios formed on textual sentiment changes deliver significant risk-adjusted returns, while those based on raw star ratings are inconsistent. Our evidence suggests that textual reviews contain more reliable and predictive information than numerical scores alone and that earlier findings based on star ratings may be overstated.
Analysts and investors should be cautious when using Glassdoor star ratings in investment decisions. Textual reviews offer a viable measure of employee sentiment and firm fundamentals.
This is the first study to document the change in Glassdoor collection procedures and subsequent higher average employer ratings. We demonstrate that textual analysis provides a viable method for the examination of employee sentiment. Our approach refines the link between employee satisfaction and asset pricing and offers practical insights for market participants.
This study aims to examine whether media-driven public perception of a firm’s environmental, social and governance performance (i.e. ESG news sentiment) and its media attention are associated with subsequent stock price crash risk. Using public sentiment formed from ESG news alone – separate from firms’ self-report...
Kesara Hewage, S. Abhayawansa, M. Chiah· Meditari Accountancy Researc...· 0 citations
Text‐based investor sentiment has become a widely used explanatory variable in asset pricing, yet its economic interpretation remains unsettled. A large empirical literature documents that sentiment measures derived from news, corporate disclosures, and social media predict short‐horizon returns, affect volatility, a...
Sougata Banerjee, D. Aggarwal· Journal of economic surveys...· 0 citations
This study examines whether salience theory explains stock returns in the Korean market from 2005 to 2024. We find a robust negative relationship between the salience of past returns (ST) and future stock returns. A long-short portfolio sorting on ST generates a significant four-factor alpha of −1.50% per month (t-stat...
Donghoon Kim, Jihoon Goh· Journal of Derivatives and Q...· 0 citations
Research Question: How does economic policy uncertainty (EPU) influence herding behavior through investor sentiment in the Chinese stock market? Motivation: Prior studies have focused on the direct effects of EPU on market behavior, yet the behavioral transmission mechanism via investor sentiment remains underexplored....
Lu Wei, Zamri Ahmad· Capital Markets Review· 0 citations
This paper examines whether and how analyst logical inconsistency affects the stock price crash risk in China’s A-share market. The sample includes 3784 listed non-financial companies. The final sample comprises 12,460 firm-year observations from 2016 to 2023. Specifically, we employ the open source Qwen1.5-14B-Chat mo...
Ying-Ge Ma, Hu Zhang, Zihuan Gao· International Journal of Fin...· 0 citations
We develop a stylized model in which sentiment-driven demand creates a pre-announcement price wedge that is harder for arbitrageurs to offset when fundamental uncertainty is high. The model predicts that prior sentiment shifts expected post-announcement returns separately from the earnings surprise and that the shift i...
H. Kazemi, C. Makridis· CESifo working papers· 0 citations
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