Financial disclosure transparency and employee wages

We test the hypothesis that less transparent financial disclosures are an undesirable firm attribute that increase the amount of information and unemployment risk that employees bear, resulting in a wage premium. Using establishment-level wage data from the U.S. Census Bureau, we document that firms with less transparent disclosures pay their employees more, especially when employees bear greater information acquisition costs, have more influence in the wage-setting process, and own more stock. Our results hold after utilizing instrumental variables and exploiting two quasi-natural experiments. Overall, our results suggest that disclosure choices can generate externalities on an important group of stakeholders.