Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media

Michael J. Jung, James Patrick Naughton, Ahmed Tahoun, Clare Wang

Research output: Working paper

Abstract

We examine whether firms strategically disseminate information to the public. Strategic dissemination refers to a firm’s decision to use or not use certain channels of communication to disseminate firm-specific information. Understanding whether firms strategically disseminate is important because it reveals how managers try to shape a firm’s overall information environment, influence how capital market participants view the firm, and affect the price discovery process. Using firms’ discretionary use of Twitter to disseminate quarterly earnings announcements, we find that firms are less likely to disseminate via Twitter when the news is bad and when the magnitude of the bad news is worse, consistent with strategic behavior. Furthermore, firms tend to send fewer earnings announcement tweets and “rehash” tweets when the news is bad. Finally, we find evidence that the tweeting of bad news and the subsequent retweeting of that news by a firm’s followers are associated with more negative news articles written about the firm by the traditional media, highlighting a potential downside to Twitter dissemination.
Original languageEnglish (US)
PublisherSocial Science Research Network (SSRN)
Number of pages51
StatePublished - May 8 2016

Fingerprint

Social media
News
Twitter
Earnings announcements
Dissemination
Managers
Information environment
Price discovery
Strategic behavior
Capital markets
Communication
Follower

Cite this

Jung, M. J., Naughton, J. P., Tahoun, A., & Wang, C. (2016). Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media. Social Science Research Network (SSRN).
Jung, Michael J. ; Naughton, James Patrick ; Tahoun, Ahmed ; Wang, Clare. / Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media. Social Science Research Network (SSRN), 2016.
@techreport{acaf4eb13cce49adb662ae9db0f7cd10,
title = "Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media",
abstract = "We examine whether firms strategically disseminate information to the public. Strategic dissemination refers to a firm’s decision to use or not use certain channels of communication to disseminate firm-specific information. Understanding whether firms strategically disseminate is important because it reveals how managers try to shape a firm’s overall information environment, influence how capital market participants view the firm, and affect the price discovery process. Using firms’ discretionary use of Twitter to disseminate quarterly earnings announcements, we find that firms are less likely to disseminate via Twitter when the news is bad and when the magnitude of the bad news is worse, consistent with strategic behavior. Furthermore, firms tend to send fewer earnings announcement tweets and “rehash” tweets when the news is bad. Finally, we find evidence that the tweeting of bad news and the subsequent retweeting of that news by a firm’s followers are associated with more negative news articles written about the firm by the traditional media, highlighting a potential downside to Twitter dissemination.",
author = "Jung, {Michael J.} and Naughton, {James Patrick} and Ahmed Tahoun and Clare Wang",
year = "2016",
month = "5",
day = "8",
language = "English (US)",
publisher = "Social Science Research Network (SSRN)",
type = "WorkingPaper",
institution = "Social Science Research Network (SSRN)",

}

Jung, MJ, Naughton, JP, Tahoun, A & Wang, C 2016 'Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media' Social Science Research Network (SSRN).

Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media. / Jung, Michael J.; Naughton, James Patrick; Tahoun, Ahmed; Wang, Clare.

Social Science Research Network (SSRN), 2016.

Research output: Working paper

TY - UNPB

T1 - Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media

AU - Jung, Michael J.

AU - Naughton, James Patrick

AU - Tahoun, Ahmed

AU - Wang, Clare

PY - 2016/5/8

Y1 - 2016/5/8

N2 - We examine whether firms strategically disseminate information to the public. Strategic dissemination refers to a firm’s decision to use or not use certain channels of communication to disseminate firm-specific information. Understanding whether firms strategically disseminate is important because it reveals how managers try to shape a firm’s overall information environment, influence how capital market participants view the firm, and affect the price discovery process. Using firms’ discretionary use of Twitter to disseminate quarterly earnings announcements, we find that firms are less likely to disseminate via Twitter when the news is bad and when the magnitude of the bad news is worse, consistent with strategic behavior. Furthermore, firms tend to send fewer earnings announcement tweets and “rehash” tweets when the news is bad. Finally, we find evidence that the tweeting of bad news and the subsequent retweeting of that news by a firm’s followers are associated with more negative news articles written about the firm by the traditional media, highlighting a potential downside to Twitter dissemination.

AB - We examine whether firms strategically disseminate information to the public. Strategic dissemination refers to a firm’s decision to use or not use certain channels of communication to disseminate firm-specific information. Understanding whether firms strategically disseminate is important because it reveals how managers try to shape a firm’s overall information environment, influence how capital market participants view the firm, and affect the price discovery process. Using firms’ discretionary use of Twitter to disseminate quarterly earnings announcements, we find that firms are less likely to disseminate via Twitter when the news is bad and when the magnitude of the bad news is worse, consistent with strategic behavior. Furthermore, firms tend to send fewer earnings announcement tweets and “rehash” tweets when the news is bad. Finally, we find evidence that the tweeting of bad news and the subsequent retweeting of that news by a firm’s followers are associated with more negative news articles written about the firm by the traditional media, highlighting a potential downside to Twitter dissemination.

M3 - Working paper

BT - Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media

PB - Social Science Research Network (SSRN)

ER -

Jung MJ, Naughton JP, Tahoun A, Wang C. Do Firms Strategically Disseminate? Evidence from Corporate Use of Social Media. Social Science Research Network (SSRN). 2016 May 8.