The Effect of Social Media on Corporate Innovation: Evidence from Seeking Alpha Coverage

Qiyang He (), Henry Leung (), Buhui Qiu and Zhou Zhou ()
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Qiyang He: University of Sydney Business School, University of Sydney, Sydney, New South Wales 2006, Australia
Henry Leung: University of Sydney Business School, University of Sydney, Sydney, New South Wales 2006, Australia
Zhou Zhou: School of Economics, Zhejiang University, Hangzhou 310027, China

Management Science, 2025, vol. 71, issue 7, 5441-5476

Abstract: Seeking Alpha (SA) is the most popular crowdsourced social media platform specializing in the financial analysis of U.S. firms, and it attracts over 17 million visitors per month. We find that firm coverage initiation on SA significantly promotes corporate innovation activities. SA coverage promotes corporate innovation by disseminating innovation-related information about the covered firm to external investors, thereby alleviating the firm’s financial constraints. Moreover, firms with higher information asymmetry, firms facing greater product market competition, and firms having lower levels of managerial short-termism reveal a greater increase in innovation outcomes following SA coverage initiation. Taken together, our findings suggest that third party-generated information on specialized social media mitigates the information asymmetry between firms and investors on corporate innovation activities and encourages corporate innovation.

Keywords: social media; Seeking Alpha; corporate innovation; information asymmetry; market competition (search for similar items in EconPapers)
Date: 2025
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