Reaching the public with Twitter: The reputation value of CEOs

In this study, we investigate whether CEOs' use of Twitter influences their compensation. The results show that CEOs benefit from being active on social media because this participation helps reduce information asymmetry. Further, the effect of this Twitter usage becomes stronger when firms fac...

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Bibliographic Details
Published in:International review of economics & finance 2024-07, Vol.94, p.103364, Article 103364
Main Authors: Du, Yao, Linh, Tran Thi Thuy, Lu, Chien-Lin, Nguyen, Hong Thoa
Format: Article
Language:English
Subjects:
Abnormal return
CEO Twitter
Compensation
Earnings announcements
Information asymmetry
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Summary:In this study, we investigate whether CEOs' use of Twitter influences their compensation. The results show that CEOs benefit from being active on social media because this participation helps reduce information asymmetry. Further, the effect of this Twitter usage becomes stronger when firms face competitive markets. We also use earnings announcements to show how CEOs' tweets can lower the deviations in stock prices around these announcements. Overall, a CEO's personal use of social media can help to reduce the information asymmetry between their firm and investors. This strategic tool benefits the CEO when negotiating compensation.
ISSN:1059-0560
DOI:10.1016/j.iref.2024.05.043