Twitter-Based Dissemination of Corporate Disclosure and the Intervening Effects of Firms' Visibility: Evidence from Australian Listed Companies
Posted: 23 Dec 2014
Date Written: January 2014
This paper investigates the effect of dissemination of corporate disclosure via Twitter. In particular, the study is focused on listed companies in Australia that employed Twitter as a secondary dissemination channel for corporate announcements in 2008-13. Based on a sample of 3,516 announcements at the Australian Stock Exchange (ASX) related to 109 listed companies, the research employs the Investor Recognition Hypothesis to investigate the effect of Twitter activity on the information asymmetry proxied by abnormal spread (SpreadAbn). The findings show that there is a negative association between SpreadAbn and tweets posted by a firm during the announcement period. Further analysis shows that this association is stronger for firms less visible through business press or financial analyst coverage. The study concludes that while corporate announcements are publicly available through the ASX platform, dissemination of corporate announcements through Twitter allows companies to attract investors' attention and decrease information asymmetry.
Keywords: social media, Twitter, capital markets, corporate disclosure, financial reporting
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