Social Media and Corruption
Institute of Political Economy and Governance; ICREA; Universitat Pompeu Fabra; New Economic School; Barcelona GSE
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)
May 26, 2015
Can publications in social media affect people’s behavior and promote accountability? We show that anti-corruption blog posts by Aleksei Navalny, a popular Russian civic activist, had a negative causal impact on market returns of state-controlled companies. For identification, we exploit the analysis of the precise timing of blog posts combined with quasirandom variation in access to blog platform caused by hacker attacks. The effect becomes less pronounced and even positive for the posts that attract the most attention, consistent with disciplining effect of social media. Finally, the posts have a long-term impact on returns and are associated with higher management turnover and less minority shareholder conflicts. Taken together, our results provide suggestive evidence that social media can discipline corruption even in a country with limited political competition.
Number of Pages in PDF File: 53
Keywords: political economy, financial markets, social media, governance
Date posted: September 27, 2012 ; Last revised: May 27, 2015
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