Visuals and Attention to Earnings News on Twitter

Review of Accounting Studies, forthcoming

60 Pages Posted: 7 Sep 2019 Last revised: 20 Jul 2021

See all articles by Alexander Nekrasov

Alexander Nekrasov

University of Illinois Chicago

Siew Hong Teoh

UCLA Anderson School of Management

Shijia Wu

The Chinese University of Hong Kong, Shenzhen - School of Management and Economics

Date Written: July 16, 2021

Abstract

We propose the visual attention hypothesis that visuals in firm earnings announcements increase attention to the earnings news. We find that visuals in firms’ Twitter earnings announcements are associated with more retweets, consistent with greater user engagement with announcements that have visuals. This result holds for earnings tweets sent by the same firm and on the same day in firm-level and tweet-level analyses. Consistent with managerial opportunism, firms are more likely to use visuals in their earnings tweets when performance is good but less persistent. Consistent with visuals increasing investor attention, the initial return response to earnings news is stronger and the post-announcement response is lower when visuals are used. Our evidence of a post-announcement return reversal indicates that visuals can be a double-edged sword. Furthermore, the higher earnings response coefficient from visuals is more pronounced on days with high investor distraction (when many other firms are also announcing earnings).

Keywords: Visual, Attention, Salience, Earnings News, Twitter, Earnings Response Coefficients

JEL Classification: D21, G12, G14, G18, G38, M41

Suggested Citation

Nekrasov, Alexander and Teoh, Siew Hong and Wu, Shijia, Visuals and Attention to Earnings News on Twitter (July 16, 2021). Review of Accounting Studies, forthcoming, Available at SSRN: https://ssrn.com/abstract=3447484 or http://dx.doi.org/10.2139/ssrn.3447484

Alexander Nekrasov (Contact Author)

University of Illinois Chicago ( email )

1200 W Harrison St
Chicago, IL 60607
United States

HOME PAGE: http://business.uic.edu/profiles/alexander-nekrasov/

Siew Hong Teoh

UCLA Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://www.anderson.ucla.edu/faculty-and-research/accounting/faculty/teoh

Shijia Wu

The Chinese University of Hong Kong, Shenzhen - School of Management and Economics ( email )

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