Can Social Media Interaction and Message Features Influence Nonprofessional Investors’ Perceptions of the Firm?

49 Pages Posted: 25 Jan 2017 Last revised: 28 Feb 2018

See all articles by Peter Kipp

Peter Kipp

University of North Texas

Amanuel F. Tadesse

University of New Orleans

Yibo (James) Zhang

Miami University of Ohio

Date Written: January 23, 2017

Abstract

We investigate the impact of social media messages on nonprofessional investors’ assessments of management credibility and firm value. In a 2 x 2 x 2 between participants experiment with 276 participants recruited from Amazon Mechanical Turk, we examine the joint effect of social media message vividness, valence, and micro-blogger influence on nonprofessional investors’ assessments of management credibility and firm value. We find that when social media messages are pallid and negative (positive), high micro-blogger influence decreases (increases) nonprofessional investors’ assessments of management credibility. In contrast, the effect is absent when messages are vivid. Further, we find that the effect of micro-blogger influence on nonprofessional investors’ assessments of blogger credibility and management credibility is mediated by social media interactions. The assessment of management credibility, in turn, significantly impacts nonprofessional investors’ firm valuation assessment. The results have implications for regulators (SEC 2013) who may wish to update their guidance to managers on how to monitor or even control nonprofessional investors’ interaction on social media platforms.

Keywords: Social media interaction; Three-way communication channel; Message valence; Micro-Blogger influence; Message vividness; Nonprofessional investors; Management credibility

Suggested Citation

Kipp, Peter and Tadesse, Amanuel F. and Zhang, Yibo, Can Social Media Interaction and Message Features Influence Nonprofessional Investors’ Perceptions of the Firm? (January 23, 2017). Available at SSRN: https://ssrn.com/abstract=2904677 or http://dx.doi.org/10.2139/ssrn.2904677

Peter Kipp (Contact Author)

University of North Texas ( email )

College of Business Administration
P.O. Box 305219
Denton, TX 76203
United States

Amanuel F. Tadesse

University of New Orleans

2000 Lakeshore Drive
New Orleans, LA 70148
United States

Yibo Zhang

Miami University of Ohio ( email )

Oxford, OH 45056
United States

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