Not Just for Investors: The Role of Earnings Announcements in Guiding Job Seekers

Using detailed search data from half a million anonymous job seekers, we study the information content of earnings announcements for job seekers. In the spirit of Beaver (1968), we find evidence that job seekers initiate job-search activity in response to a prospective employer’s earnings announcements. Job seekers search more actively for employers with media coverage and earnings growth, consistent with the attention and information roles of earnings announcements. We find corroborating evidence about the usefulness of earnings announcements’ financial information content to job seekers: (1) a survey experiment indicates that job seekers are more willing to apply to firms when provided with evidence of positive performance, (2) job seekers search for financial information during applications and interviews, and (3) financial information is predictive of future job prospects, including job openings and career growth. Overall, our paper suggests earnings announcements — among other sources — prompt and guide job seekers’ search activities.