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Glassdoor Employee Reviews Can Predict Fraudulent Activity

Want to know if a company will be investigated by the SEC? Check out its GlassDoor reviews!

More often than not, when a company commits fraud, we don’t find out about it until after the crime has been committed. But what if there was a way to know in advance if a company is on it’s way to a scandal…

According to a recent report, the first place to look is the employee reviews on GlassDoor.

A study from The Hong Kong Polytechnic University and George Washington University School of Business concluded that one of the strongest indicators of whether fraud is (or will be) present is looking at how employees write about their employers in anonymous forums, such as GlassDoor.

The report, titled Corporate Culture and Financial Reporting Risk: Looking Through the Glassdoor, discovered that employees’ views on the corporate climate were highly correlated to fraudulent behavior on both the managerial and departmental sides. Researchers looked at reviews from over 1 million employees of 4,000 companies on GlassDoor between 2008 and 2015, and found that companies whose employees reported higher job satisfaction and approval ratings for senior management, were less likely to be involved in a corporate scandal or class action lawsuit.

“We find a direct relation between a lower rated culture and fraudulent financial reporting, as indicated by issuance of an Accounting and Auditing Enforcement Releases (AAER) by the Securities and Exchange Commission (SEC) and firm’s exposure to securities class action lawsuits,” the report stated.

When employees feel extreme pressure to perform (like Wells Fargo pushing outrageous sales targets here), fraudulent activities may arise. Paying attention to both the tone at the top, as well as the culture and values as perceived by those lower on the totem pole, can produce some powerful insights on the integrity of a firm.

Regardless of your company’s reviews or rating, it’s important to report any instance of fraud if you see it. For some quick tips about how to report fraud, check out our blog post here.

And if you’re looking for a reliable way to achieve greater internal control over accounts and protect against fraud, click here to schedule a demo of ART!

By |2023-03-10T20:39:16+00:00April 26th, 2017|Blog|0 Comments
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