The Battle of Social Media Platforms: The Use of Twitter, Youtube and Instagram in Corporate Communication
52 Pages Posted: 9 Jan 2019
Date Written: January 3, 2019
This study examines whether corporate communication through Twitter, YouTube and Instagram facilitates dissemination of earnings news. We build on the investor inattention hypothesis and document that low-attention firms, captured by low analyst coverage and earnings growth potential, are more likely to announce earnings news on social media. Independently of the news content, investors react more positively and exhibit lower heterogeneity in earnings expectations if firms communicate on the three social platforms. Twitter posts increase earnings response coefficients and the effect is stronger among retail investors. YouTube videos and Instagram pictures have either negative or no effect on investors’ ability to interpret earnings news. Our results suggest not all social media platforms help investors interpret earnings news, though social media communication is perceived to signal commitment to transparency.
Keywords: social media, earnings announcements
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