The relationship between employee quality and firm outcomes is extensively explored in the literature. Prior research focuses on examining the quality of top managers in a limited number of industries or using smaller datasets. This study fills this literature gap using demographic characteristics from Metropolitan Statistical Areas, where firm headquarters are located as a proxy for employee quality. The findings show that firms with high employee quality in terms of employee competency and diversity exhibit higher firm value. The results show that ensuring the availability of an educated and diverse workforce provides long-lasting firm value.
Although information technology (IT) plays an essential role in financial reporting, many companies today lack sufficient human capabilities to utilize IT competently. We examine the association between a firm's access to IT‐capable labor and financial reporting quality (FRQ). We proxy for access to IT‐capable labor using workforce measures in the metropolitan statistical area (MSA) where the firm operates, including (1) the number of IT‐related college degrees relative to the total active workforce, (2) the level of education of IT graduates, (3) the income level of IT graduates, and (4) a composite measure. We find that firms in MSAs with a higher IT‐competent labor force are associated with fewer financial reporting misstatements and internal control issues. This study contributes to the emerging literature stream examining the influence of geographic labor characteristics on firm‐level outcomes and the research on the impact of IT capability on financial reporting processes. We also inform the current movement of integrating IT knowledge into the education curriculum.
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