Social Media and Corruption
Institute for Political Economy and Governance; Universitat Pompeu Fabra; New Economic School
Institute for Political Economy and Governance, Barcelona; Universitat Pompeu Fabra; Barcelona Graduate School of Economics (Barcelona GSE); New Economic School (NES)
Higher School of Economics; Centre for Economic Policy Research (CEPR)
July 3, 2014
Traditional mass media provide an important mechanism of fostering political and corporate accountability. In this paper we provide evidence that online social media can serve as an additional tool that promotes accountability. We study consequences of blog posts about corruption in Russian state-controlled companies. We show that the blog posts have a negative effect on stock returns of these companies, using five-minute, daily, or monthly data. This impact, however, becomes less pronounced or even positive for the posts that attract the most attention, which is consistent with the disciplining effect of social media. We also find that blog posts are associated with an increase in corporate accountability as evidenced by higher management turnover and less corporate conflicts. To confirm that the results are not driven by unobserved heterogeneity, we use incidents of distributed denial-of-service (DDoS) attacks on other blogs.
Number of Pages in PDF File: 59
Keywords: political economy, social media, accountability, governanceworking papers series
Date posted: September 27, 2012 ; Last revised: August 22, 2014
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