Crowdsourced governance: From glassdoor insights to shareholder activism

This study investigates whether employee advice shared on Glassdoor serves as an informal governance mechanism associated with shareholder activism. Drawing on agency theory, we argue that advice-oriented employee voice reduces information asymmetry and diminishes the likelihood of shareholder activism. Using 3.3 million Glassdoor reviews matched with shareholder proposal data for 2021 U.S. public firms, we document a negative association between the prevalence of employee advice and the likelihood of shareholder proposals. The substitution pattern is stronger when employee advice exhibits low sentiment dispersion and weakens when sentiment dispersion is high. Moreover, this association is concentrated among firms with low institutional ownership; when institutional ownership is high, employee advice is less salient as a governance mechanism, and shareholder activism is more prevalent. Overall, our findings suggest that employee advice provides incremental governance information that shapes shareholder activism conditional on monitoring intensity and signal coherence.