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Does Pay Transparency for Employees Affect Product Recalls?

Yangyang Chen et al.

Journal of Business Finance & Accounting2026https://doi.org/10.1111/jbfa.70057article
AJG 3ABDC A*
Weight
0.50

Abstract

Pay transparency can affect workers’ behavior and, consequently, firm outcomes. This study exploits the state‐level, staggered enactment of pay transparency laws to examine how pay transparency affects firms’ product recalls. We find that firms headquartered in pay‐transparency‐law states see an increase in product recalls. This outcome suggests that pay transparency may lower workforce quality. Lending further support to this theory, our evidence shows that the increase in recalls is more pronounced for more labor‐intensive firms, and those that are more at risk of losing key employees. An additional analysis reveals that pay transparency increases both the likelihood and severity of product recalls. Finally, we document that when pay transparency negatively impacts firms’ product quality, the firms’ future performance also declines.

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https://doi.org/https://doi.org/10.1111/jbfa.70057

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@article{yangyang2026,
  title        = {{Does Pay Transparency for Employees Affect Product Recalls?}},
  author       = {Yangyang Chen et al.},
  journal      = {Journal of Business Finance & Accounting},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/jbfa.70057},
}

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Does Pay Transparency for Employees Affect Product Recalls?

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.