Journal
ACCOUNTING ORGANIZATIONS AND SOCIETY
Volume 68-69, Issue -, Pages 63-79Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.aos.2018.03.004
Keywords
Financial disclosure; Reputation management; Social media; Twitter
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Funding
- Foster School of Business at the University of Washington
- Deloitte Foundation
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I examine how firm-investor communications on social media affect investors' perceptions of the firm. I focus on a case in which a Twitter user criticizes a discretionary accrual adjustment and management chooses whether and how to respond. I collect data using multiple experiments in which I vary the perceived validity of a criticism via the number of retweets it receives and/or the firm's response. Results suggest that the influence the criticism has on nonprofessional investors' perceptions depends on the number of times it has been retweeted. Results also suggest that following a criticism perceived to be valid, there are benefits of addressing the criticism directly or of redirecting attention to a positive highlight from the firm disclosure (relative to not responding). The findings advance our understanding of how a firm can effectively manage investors' perceptions by participating in, rather than abstaining from, conversations about the firm on social media.
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