Dissemination, Direct-Access Information Technology and Information Asymmetry

Elizabeth Blakespoor, Gregory S. Miller and Hal D. White
Additional contact information
Elizabeth Blakespoor: Stanford University
Gregory S. Miller: University of MI
Hal D. White: University of MI

Research Papers from Stanford University, Graduate School of Business

Abstract: Firm disclosures often reach only a portion of investors, which results in information asymmetry among investors, and therefore lower market liquidity. This issue is particularly salient for firms that are not highly visible, as they tend not to receive broad news dissemination via traditional intermediaries, such as the press. This paper examines whether firms can reduce information asymmetry by using a new information technology to increase the breadth of dissemination of firm disclosures. Using a sample of technology firms, we examine the impact of using Twitter to send market participants links to press releases that are provided via traditional disclosure methods. We find this additional dissemination of firm-initiated news via Twitter is associated with lower bid-ask spreads and greater depths, consistent with a reduction in information asymmetry. Moreover, this result holds mainly for less visible firms, consistent with them being in greater need of this additional dissemination channel. We also decompose spread into an information asymmetry component and a non-information asymmetry component, and we find that dissemination via Twitter is negatively associated with the information asymmetry component. Finally, we examine the impact of dissemination on a volume-based measure of liquidity, and find that dissemination is positively associated with liquidity.

Date: 2012-06
New Economics Papers: this item is included in nep-ict
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://gsbapps.stanford.edu/researchpapers/library/RP2106.pdf
Our link check indicates that this URL is bad, the error code is: 400 Bad Request (https://gsbapps.stanford.edu/researchpapers/library/RP2106.pdf [302 Found]--> https://login.stanford.edu/idp/profile/SAML2/Redirect/SSO?SAMLRequest=fZLLbsIwEEV%2FJfKeOBhSgUUipbAoEm0RSbvopnKcCVhy7NTj9PH3DYSqsGHtO2fmHnmBotEtzzp%2FMDv46AB98N1og%2Fz0kJDOGW4FKuRGNIDcS55njxvOwoi3znorrSZBhgjOK2uW1mDXgMvBfSoJL7tNQg7et8gp3WMp2hZD9MLU1lUhVB3ND6osrQZ%2FCBEtPbIZ3T7nBQlW%2FTHKiCP2H6LtXplrhKpa2p9SKw3n%2BR1UyoH0NM%2BfSbBeJeR9VjEWiXgW1QymUI%2FnsahlzWQl55Fgs7s%2BhtjB2hzRPiEsYvEomoxYXIynfDLm0%2FkbCbbnxvfKVMrsb%2BsphxDyh6LYjoZOr%2BDw1KcPkHRxlMxPi92F9ttY8eeapDfNLugFfVjV8qcet15trVbyJ8i0tl9LB8JDQsaEpsPI9XdIfwE%3D&RelayState=ss%3Amem%3A30eb74174e1c6e0507eb795b52ea253311291727ab7ea637e428ddb3cb4f6cf7)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:2106

Access Statistics for this paper

More papers in Research Papers from Stanford University, Graduate School of Business Contact information at EDIRC.
Bibliographic data for series maintained by (workingpapers@econlit.org).