This paper studies the grouping of firms based on their labor-market connections, a significant departure from the traditional approach of grouping based on product-market connections. It also proposes a measure of labor market peers by analyzing the “also viewed” companies on two major online labor market platforms, LinkedIn and Glassdoor. Using the labor market peer measure, I examine whether firms that hire employees with similar skills and that are presumably exposed to the same labor-related risks and shocks exhibit a strong comovement of stock returns and accounting-based performance variables. I find that labor market peers overlap but differ from traditional product-market-based industry groupings, have significant incremental power to explain stock return and accounting-based performance measure comovements, and outperform traditional industry groupings in explaining return and wage comovements when a base firm shares more labor skills with its peers. Overall, the study highlights that labor market peers capture fundamental linkages between firms that are challenging to identify using traditional industry measures.

We estimate investors’ disagreement regarding firm news and assess its ability to predict stock returns. Specifically, we quantify firm-level investor disagreement through the volume-volatility elasticity surrounding firm news; higher elasticity is associated with less investor disagreement. Intuitively, disagreement introduces additional trading motives that are not driven by price changes, weakening the connection between volume and volatility. Our findings indicate that investor disagreement on news negatively predicts cross-sectional returns. We also present empirical evidence aligned with the theoretical predictions of a recently developed model by Atmaz and Basak (Journal of Finance 73 (3): 1225–1279 2018) that the negative disagreement-stock relation strengthens when the optimism effect dominates the uncertainty effect. Importantly, this predictive relationship remains robust after controlling for news heterogeneity, other volume- and volatility-based measures, and alternative channels.

How important is equal access to mandatory disclosures? We exploit the postal strike of 1970 that caused a delay in the delivery of annual reports via mail. This strike created unequal access because certain investors (e.g., institutions) had both the incentives and ability to obtain the annual reports by other means. Theory predicts that, when differential access exists, adverse selection problems intensify, causing a decline in stock trading. Our findings support this prediction: stock trading volume decreased by approximately 28% for firms unable to deliver the annual reports to shareholders during the strike, and this trading decline gradually dissipated afterward. Further tests confirm adverse selection as the primary mechanism. Overall, our paper underscores the importance of equal access to annual reports—a key mandated disclosure—and demonstrates the value of these reports to shareholders, as evidenced by their reluctance to trade absent this information.

We find irregular patterns in the distribution of firms’ reported quarterly gross margin percentages. Specifically, there is significant bunching around percentage integers that are highly round (e.g., multiples of 10, such as 30%, 40%, etc.) or are neatly divisible (e.g., 25%, 75%), compared to what is predicted by counterfactual distributions. Further investigation reveals that highly round gross margin firms are smaller, exert higher effort, achieve higher productivity, have more difficult goals, and pay their CEOs with a higher portion of fixed income. We also find that highly round gross margins are associated with superior performance. Additionally, we do not find consistent evidence that highly round gross margin reference points are linked to external rewards. Collectively, our evidence is consistent with reference-dependent preferences for highly round gross margins likely being driven by intrinsic (rather than extrinsic) motivations.