Management‐Employee Alliance and Earnings Opacity*
研究利用26个国家交错实施的就业保护法，发现该法促使管理层与员工形成联盟，导致盈余报告更不透明，并阻碍机构股东及时调整投资组合。
ABSTRACT The rise of stakeholder governance has triggered a wave of legal initiatives to strengthen the employee voice in firms. However, how managers trade off the competing objectives between shareholders and employees when making financial reporting decisions is not well understood. Exploiting staggered employment protection laws (EPLs) across 26 countries, we find that managers facing strong EPLs report more opaque earnings. Exploring the mechanism, we show that EPLs induce manager‐employee alliance: EPLs enhance employees' power to influence managers' private benefits and create an incentive for managers to treat employees more favorably, leading to an increase in manager‐employee reciprocal benefits. Further analysis shows that the alliance drives the increase in opacity following EPLs. Such alliance‐induced opacity impedes the ability of institutional shareholders to make timely adjustments to portfolio holdings in response to EPLs. Last, we identify several governance mechanisms that help break the manager‐employee nexus and restore reporting transparency. Overall, our study documents manager‐employee alliance as a potential cost of rigid labor laws and an important source of managerial reporting bias.