Tweeting Away Firm Value: How Investors Evaluate CEOs' Use of Social Media

47 Pages Posted: 31 Aug 2013 Last revised: 23 May 2023

See all articles by Hailiang Chen

Hailiang Chen

HKU Business School, The University of Hong Kong

Byoung-Hyoun Hwang

Nanyang Business School, Nanyang Technological University

Baixiao Liu

Peking University HSBC Business School

Yi Tang

The University of Hong Kong - Faculty of Business and Economics

Date Written: May 22, 2023

Abstract

Our study examines CEOs’ use of social media and how investors evaluate such activity. We propose that when a company is comparatively uncommunicative and makes few announcements, a CEO’s adoption of social media can improve the information environment and increase the price investors are willing to pay for a share of the company. At the same time, when a CEO sends unusually many posts, sends posts that are mostly non-work related, reaches online “celebrity status,” and works for a firm with weak corporate governance, social media activity can be seen as an indication of “unfocusedness” and “self-centeredness” and lower the price investors are willing to pay. Our analysis of S&P 1500 CEOs with active personal Twitter accounts yields strong support for our predictions. We discuss the implications of our findings for the strategic leadership and the corporate governance literatures.

Keywords: Social Media Usage, Information Environment, Agency Cost, Strategic Leadership, Corporate Governance

JEL Classification: G12, G14, G38, M41, M48

Suggested Citation

Chen, Hailiang and Hwang, Byoung-Hyoun and Liu, Baixiao and Tang, Yi, Tweeting Away Firm Value: How Investors Evaluate CEOs' Use of Social Media (May 22, 2023). Available at SSRN: https://ssrn.com/abstract=2318094 or http://dx.doi.org/10.2139/ssrn.2318094

Hailiang Chen

HKU Business School, The University of Hong Kong ( email )

Hong Kong
China

HOME PAGE: http://https://www.hkubs.hku.hk/people/hailiang-chen

Byoung-Hyoun Hwang (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

Baixiao Liu

Peking University HSBC Business School ( email )

Yi Tang

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

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