Board Diversity and Earnings News Dissemination on Twitter in the UK

Abstract

We examine corporate adoption of Twitter by UK firms and provide the first empirical evidence on the association between board diversity, as measured by the proportion of foreign and women directors, and the decision to disseminate news in general and earnings news in particular through Twitter. We measure social media dissemination by tracing Twitter posts (tweets) by UK firms between 2013 and 2015. Utilizing the unique data by Spencer and Stuart on board characteristics, we investigate the relationship between diversity and earnings dissemination in top 150 UK companies between 2013 and 2015. We find that our board diversity measures are positively associated with using Twitter to disseminate earnings at least once, with the frequency of using Twitter to disseminate quarterly earnings, and with the number of tweets disseminating financial information. We also provide evidence that the presence of foreign directors is associated with earlier adoption of Twitter as an information dissemination channel. The results are robust to controlling for firm-level characteristics, other board structure variables, and industry and year-fixed effects. Additionally, we show that firms audited by Big Four auditors are more likely to use Twitter to disseminate earnings information. Our findings show the importance of diverse boards in using Twitter as an alternative or additional information dissemination channel.

Keywords: Dissemination, Disclosure, Social media, Twitter

JEL Classification: G34, M10, M41