۱- Introduction

۲- Components of financial communications

۳- A new twist: the entrance of social media in firm communications

۴- Advice for future research

۵- Conclusion

References

Abstract

I provide a general framework of firms’ financial communication process and investor response to information, moving from disclosure through dissemination to investor response and management response. I then discuss the entrance of social media into firm communications, highlighting both classic and unique aspects of social media in the communication process. I place Cade (2018) in this literature and discuss areas ripe for future research. Finally, I encourage researchers interested in social media to acknowledge and embrace the unique opportunities and challenges in this area.

Introduction

Firm disclosure is an important and growing area of research in accounting literature, with numerous studies examining how firms’ financial communication choices affect investor response and capital market outcomes.1 Recently, social media has transformed the scope of firm financial communications and created opportunities for unprecedented interactions. As a result, experimental, archival, and analytical research studies increasingly examine the implications of social media platforms for firm communications. In the next sections, I lay out a framework for firm communication and investor response to communications. I then discuss what social media could mean for each of these components, focusing on ways in which fundamental relations are more easily studied with social media and on ways in which social media changes the core interaction. Cade (2018) encompasses both of these approaches by using an experiment to examine public interactions of managers and investors on social media, and using newly observable measures of external validation to show that investor response varies based on the credibility of statements. I discuss Cade (2018) in the context of this literature, and I highlight areas ripe for future research.