Social Media, Accounting Information Networks, and Market Reaction: The Effects of Firm-to-Investor, Stakeholder-to-Investor, and Investor-to-Investor Twitter Networks

49 Pages Posted: 27 Nov 2018 Last revised: 22 May 2019

See all articles by Gregory D. Saxton

Gregory D. Saxton

Schulich School of Business, York University

Date Written: May 20, 2019

Abstract

The widespread adoption of social media has engendered notable changes in who is involved in the production, dissemination, and reformulation of market-relevant information. Building on this idea, this study posits that different types of accounting information networks feature different types of actors who produce and disseminate different types of information and thus have different market effects. This study specifically conceptualizes three types of Twitter-based accounting information networks – firm-to-investor networks, stakeholder-to-investor networks, and investor-to-investor networks – and tests for the direct and interactive effects these networks have on abnormal returns around SEC Form 8-K filing events. The results confirm the broad proposition that the three online information networks play distinct roles in the market for information. In an era of social media-driven “truthiness,” “clickbait,” “information silos,” “firestorms,” and “fake news,” it is important to better understand how different types of online information communities are influencing the capital markets; this study helps propel research further in this direction.

Keywords: Big Data, communication networks, firm-to-investor communication, information environment, investor-to-investor communication, social media, Twitter

JEL Classification: D80, G00, G12, G14, M41, O33

Suggested Citation

Saxton, Gregory D., Social Media, Accounting Information Networks, and Market Reaction: The Effects of Firm-to-Investor, Stakeholder-to-Investor, and Investor-to-Investor Twitter Networks (May 20, 2019). Available at SSRN: https://ssrn.com/abstract=3277184 or http://dx.doi.org/10.2139/ssrn.3277184

Gregory D. Saxton (Contact Author)

Schulich School of Business, York University ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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