Earnings-related activity of the S&P 500 firms on social media: An analysis of information content and audience response

I manually examine earnings-related Twitter activity from 2015 to 2019, for the S&P 500 firms, isolating tweets based on information content. My findings indicate that firms are less likely to disclose quantitative numerical earnings information in tweets when firm performance is below analyst expectations and more likely to disclose when performance exceeds expectations. Additionally, I test investor reactions to quantitative tweets through both Twitter follower response as well as capital market response. I find that not only is Twitter follower attention greater for tweets containing quantitative information, but that there is also a positive association with quantitative tweets and market returns as a firm’s quarterly financial performance increases. Overall, my findings show that the use of Twitter is favorable for firms as value-add numerical information more likely quantifies good firm performance and yields greater reaction. However, my findings also show the ability firms have via social media to mislead investors, as firms have the discretion to limit the exposure of quantitative information when firm performance is poor.