Firm Disclosure via Social Media – The Use of Twitter for Disseminating Management Guidance and Forward-looking Information
Description
Social media has become a common disclosure channel for firms in recent years (Best and Caylor, 2019; Hsu and Wang, 2021), and modifies how companies communicate with stakeholders (Blankespoor, 2018; Guindy et al., 2024). Firms have been increasingly using particularly Twitter (now X), to communicate and disseminate information (Blankespoor et al., 2014; Gómez-Carrasco et al., 2021; Jung et al., 2018; Lee et al., 2015; Zhou et al., 2015). However, little is known about how firms might use Twitter to disclose certain types of information, like forward-looking information including forecast-like guidance or other non-forecast-like but forward-looking statements (Bozanic et al., 2018). Management guidance and forward-looking statements represent one of the key disclosure mechanisms by which managers can communicate financial performance expectations to stakeholders. In this paper, we seek to explore the properties of guidance and other forward-looking information issued via Twitter. In addition, we examine the genesis of guidance disclosures via Twitter and whether the decision to use social media to provide guidance-related and forward-looking tweets is related to firm attributes, the informational attributes of the forecasts, whether it appears to be strategic in nature, and the market reactions and liquidity effects to the tweets.
More, specifically, we analyze management guidance and other forward-looking disclosures of Standard & Poor’s (S&P) 1500 firms via Twitter from 2013-2020. We make use of the unique U.S. setting where companies have been allowed to use social media as a channel to disseminate corporate news starting since 2013 (Securities and Exchange Commission (SEC), 2013). This provides us with a setting where we can run both time-series as well as cross-sectional analyses to investigate how firms disseminate firm disclosures via Twitter compared to traditional channels (e.g. conference calls, earnings announcements etc.).
More, specifically, we analyze management guidance and other forward-looking disclosures of Standard & Poor’s (S&P) 1500 firms via Twitter from 2013-2020. We make use of the unique U.S. setting where companies have been allowed to use social media as a channel to disseminate corporate news starting since 2013 (Securities and Exchange Commission (SEC), 2013). This provides us with a setting where we can run both time-series as well as cross-sectional analyses to investigate how firms disseminate firm disclosures via Twitter compared to traditional channels (e.g. conference calls, earnings announcements etc.).
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