No. 238: Sustainability Reporting and Social Media Communication: Evidence from an Employer Review Platform

We exploit the introduction of the European Non-Financial Reporting Directive (NFRD) as a mandatory sustainability mandate to study its impact on firms’ voluntary employer-employee communication on Kununu.com. We find that firms systematically change their communication following the implementation of the sustainability reporting mandate. Relative to a control group of large private firms, treated firms in the post-mandate period provide employer comments that are more standardized and less informative. Based on our evidence and aligned with prior research, these patterns reflect internal standardization processes triggered by the sustainability mandate, which spill over to firms’ voluntary communication practices. Additional analyses reveal that the inclusion of contact information in employer comments serves as a substitute for comment informativeness, while signaling an organizational department is associated with greater comment informativeness and reduced standardization. Our paper contributes to the understanding of the broader consequences of sustainability reporting mandates, provides evidence on potentially unintended consequences, and offers novel insights into social media communication on employer review platforms.