Corporate Twitter use and cost of equity capital

Mohamed Al Guindy

Journal of Corporate Finance, 2021, vol. 68, issue C

Abstract: This paper investigates whether firms that communicate information on social media have a lower cost of equity capital. Using a hand-collected dataset comprising the full universe of all firms listed on the NYSE, AMEX and NASDAQ since the inception of Twitter, I show that firms that use Twitter have a lower cost of equity capital. Furthermore, firms that face the greatest information asymmetries; namely, smaller companies, companies with few analyst followings, and companies with the least institutional holdings, benefit particularly from tweeting financial information. For identification, I employ a difference-in-difference analysis based on the staggered adoption of Twitter, and a propensity score match (PSM) of tweeting and non-tweeting firms.

Keywords: Social media; Twitter; Information asymmetry; Cost of capital; Disclosure; Textual analysis (search for similar items in EconPapers)
JEL-codes: D82 G14 G30 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:68:y:2021:i:c:s092911992100047x

DOI: 10.1016/j.jcorpfin.2021.101926

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