The Web Mirrors Value in the Real World – Comparing a Firm’s Valuation with Its Web Network Position

24 Pages Posted: 6 Oct 2012 Last revised: 15 Jan 2014

Qiaoyun Yun

South China Normal University,

Peter A. Gloor

Massachusetts Institute of Technology (MIT)

Date Written: October 4, 2012

Abstract

This paper compares a firm’s innovation and performance with its online Web presence measured through the Web network structure. 489 firms in five different industries listed on the United States and Chinese stock markets are investigated. Using Web link data collected from Bing, blogs, Twitter and Wikipedia, we find positive correlation between betweenness centrality of a firm in the Web network and its innovation capability; and significant correlation between betweenness centrality and financial performance. We also find that Twitter, Wikipedia only predict a firm’s performance in the US, which is not surprising as they are officially blocked in China. Blogs predict better in China than they do in the US, for they might still be the major social media tools for Chinese firms; while for U.S. firms, blogs have been supplemented by Twitter and Wikipedia.

Keywords: online social network analysis, Web link structure, betweenness centrality, degree centrality, innovation, market capitalization, annual revenue, annual net income, performance, Bing, blog, Twitter, Wikipedia, China, United States

JEL Classification: A14, C53, C63, D23, M13, O31, P52

Suggested Citation

Yun, Qiaoyun and Gloor, Peter A., The Web Mirrors Value in the Real World – Comparing a Firm’s Valuation with Its Web Network Position (October 4, 2012). MIT Sloan Research Paper No. 4973-12. Available at SSRN: https://ssrn.com/abstract=2157278 or http://dx.doi.org/10.2139/ssrn.2157278

Qiaoyun Yun

South China Normal University, ( email )

Nanhai Information and Technology Park, Shishan,
Nanhai District, Foshan City
Guangzhou, 510631, Guangdong Province 528225
China
86-757-86687696 (Phone)

Peter A. Gloor (Contact Author)

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

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