Pump It Up? Tweeting to Manage Investor Attention to Earnings News

39 Pages Posted: 23 Jan 2014 Last revised: 27 Dec 2016

See all articles by Vineet Bhagwat

Vineet Bhagwat

George Washington University - Department of Finance

Timothy R. Burch

University of Miami - Department of Finance

Date Written: December 26, 2016

Abstract

We examine how firms' tweeting behavior affects earnings-news returns. Tweeting about earnings news increases the magnitude of announcement returns, particularly when the earning surprise is small and positive and when the firm is less visible as measured by firm size or analyst coverage. We also find evidence of strategic tweeting, particularly by firms that manage earnings: financial tweeting is more frequent around positive earnings surprises, especially those that are less visible. Overall, we conclude Twitter provides firms an effective and strategic way to mitigate investors' limited attention to news, especially when the news is otherwise less likely to attract notice.

Keywords: Social media, Twitter, Investor limited attention

JEL Classification: G14

Suggested Citation

Bhagwat, Vineet and Burch, Timothy R., Pump It Up? Tweeting to Manage Investor Attention to Earnings News (December 26, 2016). Available at SSRN: https://ssrn.com/abstract=2382962 or http://dx.doi.org/10.2139/ssrn.2382962

Vineet Bhagwat (Contact Author)

George Washington University - Department of Finance ( email )

2023 G Street
Washington, DC 20052
United States

Timothy R. Burch

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States
305-284-1509 (Phone)
305-284-4800 (Fax)

HOME PAGE: http://www.bus.miami.edu/~tburch

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