The Emergence of 'Social Executives' and Its Consequences for Financial Markets

Abstract

We document the emergence of “social executives,” top executives who connect with investors directly, personally, and in real time through social media, and we study the consequences of this development for financial markets. We contend that the emergence of social executives enables investors to obtain value-relevant information to which they previously had no access, and that this enhancement to the information environment increases investor participation and improves stock market liquidity. Using data reflecting the personal Twitter account activity of the CEOs and CFOs of the largest publicly traded companies in the United States, we find evidence consistent with our hypothesis.

Keywords: Social executives, Social Media, Investors, Stock Markets

JEL Classification: G12, G14, G38, M41, M48