The Monitoring Role of Social Media

Review of Accounting Studies, forthcoming.

65 Pages Posted: 22 Nov 2022 Last revised: 22 Dec 2022

See all articles by Jonas Heese

Jonas Heese

Harvard University - Business School (HBS)

Joseph Pacelli

Harvard University - Business School (HBS)

Date Written: December 20, 2022

Abstract

In this study, we examine whether social media activity can reduce corporate misconduct. We use the staggered introduction of 3G mobile broadband access across the United States to identify exogenous increases in social media activity and test whether access to 3G reduces misconduct. We find that facilities substantially reduce both violations and penalties following the introduction of 3G in a local area. To validate social media activity as the underlying mechanism, we show that 3G access results in sharp increases in Tweet volume and that facilities located in areas with high Tweet volume engage in less misconduct. The effect of 3G access on misconduct is stronger for facilities of more visible firms and concentrated in non-financial violations, such as those involving unsafe workplace conditions and inappropriate treatment of employees and customers. Overall, our results demonstrate that social media plays an important role in monitoring corporate misconduct.

Keywords: corporate misconduct, social media, Twitter, mobile broadband.

JEL Classification: M40, M41, M43

Suggested Citation

Heese, Jonas and Pacelli, Joseph, The Monitoring Role of Social Media (December 20, 2022). Review of Accounting Studies, forthcoming., Available at SSRN: https://ssrn.com/abstract=4278696 or http://dx.doi.org/10.2139/ssrn.4278696

Jonas Heese (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan Hall 397
Boston, MA 02163
United States

Joseph Pacelli

Harvard University - Business School (HBS) ( email )

Boston, MA 02163
United States

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