Visuals and Attention to Earnings News on Twitter
Review of Accounting Studies, forthcoming
60 Pages Posted: 7 Sep 2019 Last revised: 20 Jul 2021
Date Written: July 16, 2021
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: Suggested Citation