Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media

59 Pages Posted: 1 Apr 2015 Last revised: 8 Aug 2018

See all articles by Michael J. Jung

Michael J. Jung

University of Delaware - Alfred Lerner College of Business and Economics

James P. Naughton

University of Virginia, Darden School of Business

Ahmed Tahoun

London Business School

Clare Wang

University of Colorado at Boulder - Leeds School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: July 1, 2018

Abstract

We examine whether firms use social media to strategically disseminate financial information. Analyzing S&P 1500 firms’ use of Twitter to disseminate quarterly earnings announcements, we find that firms are less likely to disseminate when the news is bad and when the magnitude of the bad news is worse, consistent with strategic behavior. Furthermore, firms tend to send fewer earnings announcement tweets and “rehash” tweets when the news is bad. Cross-sectional analyses suggest incentives for strategic dissemination are higher for firms with a lower level of investor sophistication and firms with a larger social media audience. We also find that strategic dissemination behavior is detectable in high litigation risk firms but not low litigation risk firms. Finally, we find that the tweeting of bad news and the subsequent retweeting of that news by a firm’s followers are associated with more negative news articles written about the firm by the traditional media, highlighting a potential downside to Twitter dissemination.

Keywords: Twitter, social media, strategic dissemination, strategic disclosure

JEL Classification: G14, G38, M10, M21, M41

Suggested Citation

Jung, Michael J. and Naughton, James P. and Tahoun, Ahmed and Wang, Clare, Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media (July 1, 2018). The Accounting Review, July 2018, Vol. 93, No. 4, pp. 225-252., Available at SSRN: https://ssrn.com/abstract=2588081 or http://dx.doi.org/10.2139/ssrn.2588081

Michael J. Jung (Contact Author)

University of Delaware - Alfred Lerner College of Business and Economics ( email )

221 Purnell Hall
Newark, DE 19716
United States

James P. Naughton

University of Virginia, Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Ahmed Tahoun

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Clare Wang

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
2,003
Abstract Views
11,513
Rank
10,367
PlumX Metrics