The Adoption of Social Technologies and the Consequences for Financial Markets

Abstract

An increasing amount of our information, including financial information, is transmitted through social technologies. Social media can provide unique, value-relevant perspectives. Social media can also be a source of noise or misinformation. Our study considers the adoption of social technologies by CEOs and CFOs of S&P 1500 companies. We construct a comprehensive dataset of all information transmitted through this channel. We then use the Securities and Exchange Commission's "embrace" of social media in April 2013 as part of our identification. Our evidence suggests that – on balance – the adoption of social technologies by CEOs and CFOs has improved the information environment.

Keywords: Social Technologies, Executives, Information Environment

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