The Effect of Social Media Trending on Traditional Media Coverage

52 Pages Posted: 16 Apr 2024

See all articles by Richard M. Crowley

Richard M. Crowley

Singapore Management University - School of Accountancy

Yun Lou

Singapore Management University - School of Accountancy

Yuan Zhao

Singapore Management University - School of Accountancy

Date Written: April 3, 2024

Abstract

We examine whether social media activities affect traditional media coverage. Focusing on abnormally high volumes of discussion about firms around their earnings announcements (i.e., social media trending), we find that traditional media outlets are more likely to cover earnings announcements that are experiencing social media trending. The effect is more pronounced when social media trending is more sensational or less informative and when financial journalists at traditional media outlets actively use social media. However, the effect is weaker when financial journalists are busier. Taken together, these results suggest that traditional media strategically leverages social media to cater to its readers’ interests and provide more informative coverage to complement social media. Additional tests find that traditional media coverage that has the same tone as trending social media discussion increases firms’ stock liquidity around earnings announcements.

Keywords: earnings announcements, social media, social media trending, traditional media

JEL Classification: G14, L82, M40, M41

Suggested Citation

Crowley, Richard M. and Lou, Yun and Zhao, Yuan, The Effect of Social Media Trending on Traditional Media Coverage (April 3, 2024). Available at SSRN: https://ssrn.com/abstract=4785180 or http://dx.doi.org/10.2139/ssrn.4785180

Richard M. Crowley (Contact Author)

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

HOME PAGE: http://rmc.link

Yun Lou

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

Yuan Zhao

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

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