Corporate use of the X social media platform and analyst forecasting
DOI:
https://doi.org/10.16930/2237-766220243519Keywords:
Social media, X, Analyst forecastAbstract
This study aimed to investigate whether the corporate use of X (formerly Twitter) for disseminating financial information, as well as likes, comments, and retweets related to this information, can improve analysts' forecasting accuracy. The dissemination of information on X signals additional evidence for stakeholders in the organization, such as analysts. Multiple linear regression was employed, with robust standard errors. The analysis consisted of 2,548 observations from the period of 2013 to 2019. The results demonstrate that analysts' forecast error is maximized according to the reactions to the posts. Likes, comments, and retweets from the previous quarter influence the accuracy of analysts' forecasts in the current quarter. A possible explanation for this result may lie in the fact that companies publish excessively optimistic information. This leads to an optimistic reaction from users, consequently inducing analysts to err. Further analysis examined the interaction between profitable companies during the period and the variables from X. The results of the interaction between the variables and the companies' profits indicated that profitable companies that tweet demonstrate a greater forecast error from analysts compared to profitable companies that do not tweet. The research highlighted that social media can be an important channel for companies to disseminate financial information. Furthermore, the interaction between companies and stakeholders, or among stakeholders themselves on X, facilitates communication, information circulation, and enables feedback—factors that, together, influence stakeholders in the company, such as analysts.
References
Amin, A., Hasan, R., & Malik, M. (2019). Social media information and analyst forecasts. Managerial Finance. 46(2), 197-216. https://doi.org/10.1108/MF-07-2018-0323
Arnaboldi, M., Busco, C., & Cuganesan, S. (2017). Accounting, accountability, social media and big data: revolution or hype?. Accounting, Auditing & Accountability Journal, 30(4), 762-776. https://doi.org/10.1108/AAAJ-03-2017-2880
Bartov, E., Faurel, L., & Mohanram, P.S. (2018). Can twitter help predict firm-level earnings and stock returns?. The Accounting Review, 93(3), 25-57. https://doi.org/10.2308/accr-51865
Bilinski, P. (2019). Bilinski, Pawel, Living in the Digital Age: The Usefulness of Twitter, YouTube and Instagram in Corporate Communication (January 3, 2019). http://dx.doi.org/10.2139/ssrn.3311183
Blankespoor, E., Miller, G. S., & White, H. D. (2014). The role of dissemination in market liquidity: Evidence from firms' use of Twitter™. The Accounting Review, 89(1), 79-112. https://doi.org/10.2308/accr-50576
Brown, L. D. (1993). Earnings forecasting research: its implications for capital markets research. International journal of forecasting, 9(3), 295-320. https://doi.org/10.1016/0169-2070(93)90023-G
Cade, N. L. (2018). Corporate social media: How two-way disclosure channels influence
investors. Accounting, Organizations and Society, 68, 63-79. https://doi.org/10.1016/j.aos.2018.03.004
Chi, Y. H., & Ziebart, D. A. (2014). Benefits of management disclosure precision on analysts’ forecasts. Review of Accounting and Finance, 13, 371-399. https://doi.org/10.1108/RAF-06-2012-0061
Dhaliwal, D. S., Radhakrishnan, S., Tsang, A., & Yang, Y. G. (2012). Nonfinancial disclosure and analyst forecast accuracy: International evidence on corporate social responsibility disclosure. The Accounting Review, 87(3), 723-759. https://doi.org/10.2308/accr-10218
Dlamini, N. N., & Johnston, K. (2018). The use of social media by South African organisations. Journal of Advances in Management Research, 15(2), 198-210. https://doi.org/10.1108/JAMR-05-2017-0063
Giordani, M. S.; Ferreira, L. B.; Ames, A. C.; Silva, T. P. (2023) Governança Corporativa E Desempenho De Mercado: O Efeito Moderador do Uso do Twitter. Contabilidade Vista & Revista,34(1), 74-97.
Giordani, M., & Klann, R. C. (2022). Uso Corporativo de Mídias Sociais e a Relevância da Informação Contábil. Advances in Scientific and Applied Accounting, 15(1). https://doi.org/10.14392/asaa.2022150102
Giordani, M., Lunardi, M. A., & Klann, R. C. (2020). Uso corporativo de mídias sociais e o desempenho de mercado. Revista de Contabilidade e Organizações, 14, e169560. https://doi.org/10.11606/issn.1982-6486.rco.2020.169560
Hales, J., Moon Jr, J. R., & Swenson, L. A. (2018). A new era of voluntary disclosure? Empirical evidence on how employee postings on social media relate to future corporate disclosures. Accounting, Organizations and Society, 68, 88-108. https://doi.org/10.1016/j.aos.2018.04.004
Embong, Z., & Hosseini, L. (2018). Analyst Forecast Accuracy and Earnings Management. Asian Journal of Accounting & Governance, 10, 97-108. http://dx.doi.org/10.17576/AJAG-2018-10-09
Hong, H., & Kubik, J. D. (2003). Analyzing the analysts: Career concerns and biased earnings forecasts. The Journal of Finance, 58(1), 313-351. https://doi.org/10.1111/1540-6261.00526
Jung, M. J., Naughton, J. P., Tahoun, A., & Wang, C. (2018). Do firms strategically disseminate? Evidence from corporate use of social media. The Accounting Review, 93(4), 225-252.
Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of Social Media. Business horizons, 53(1), 59-68. https://doi.org/10.1016/j.bushor.2009.09.003
Lee, L. F., Hutton, A. P., & Shu, S. (2015). The role of social media in the capital market: Evidence from consumer product recalls. Journal of Accounting Research, 53(2), 367-404. https://doi.org/10.1111/1475-679X.12074
Manetti, G., & Bellucci, M. (2016). The use of social media for engaging stakeholders in sustainability reporting. Accounting, auditing & accountability journal, 29(6), 985-1011. https://doi.org/10.1108/AAAJ-08-2014-1797
Manetti, G., Bellucci, M., & Bagnoli, L. (2017). Stakeholder engagement and public information through social media: a study of Canadian and American public transportation agencies. The American Review of Public Administration, 47(8), 991-1009. https://doi.org/10.1177/0275074016649260
Mota, S. L., & de Pinto, S. K. (2017). A utilização do Twitter na análise do disclosure voluntário das empresas brasileiras com níveis diferenciados de governança corporativa. Revista Evidenciação Contábil & Finanças, 5(1), 22-38. https://doi.org/10.18405/recfin20170102
Nerantzidis, M., Tampakoudis, I., & She, C. (2024). Social media in accounting research: A review and future research agenda. Journal of International Accounting, Auditing and Taxation, 100595. https://doi.org/10.1016/j.intaccaudtax.2024.100595
Paniagua, J., & Sapena, J. (2014). Business performance and social media: Love or hate?. Business horizons, 57(6), 719-728. https://doi.org/10.1016/j.bushor.2014.07.005
Parveen, F., Jaafar, N. I., & Ainin, S. (2016). Social media’s impact on organizational performance and entrepreneurial orientation in organizations. Management Decision, 54(9), 2208-2234.
Rogers, R. & Grant, J. (1997). Content analysis of information cited in reports of sell-side financial analysts. Journal of Financial Statement Analysis, 3(1), 17-30.
Schipper, K. (1991). Analysts’ forecasts. Accounting horizons, 5(4), 105-121.
Smith, A. L., Alfonso, E., & Hogan, R. (2018). The impact of an SEC investigation on conference call participation and analysts’ forecast quality. Research in Accounting Regulation, 30(2), 148-158. https://doi.org/10.1016/j.racreg.2018.09.006
Statista, (2022). Number of monthly active Twitter users worldwide from 1st quarter 2010 to 1st quarter 2022. https://www.statista.com/statistics/282087/number-ofmonthly-active-twitter-users/
Teoh, S. H. (2018). The promise and challenges of new datasets for accounting research. Accounting, Organizations and Society, 68, 109-117. https://doi.org/10.1016/j.aos.2018.03.008
Tsao, S. M., Lu, H. T., & Keung, E. C. (2016). Voluntary monthly earnings disclosures and analyst behavior. Journal of Banking & Finance, 71, 37-49. https://doi.org/10.1016/j.jbankfin.2016.04.010
Tumasjan, A., Braun, R., & Stolz, B. (2021). Twitter sentiment as a weak signal in venture capital financing. Journal of Business Venturing, 36 (2), 106062. https://doi.org/10.1016/j.jbusvent.2020.106062
Vanstraelen, A., Zarzeski, M. T., & Robb, S. W. (2003). Corporate nonfinancial disclosure practices and financial analyst forecast ability across three European countries. Journal of International Financial Management & Accounting, 14(3), 249-278. https://doi.org/10.1111/1467-646X.00098
Xiang, Y., & Birt, J. L. (2021). Internet reporting, social media strategy and firm characteristics–an Australian study. Accounting Research Journal, 34(1), 43-75. https://doi.org/10.1108/ARJ-09-2018-0154
Yang, J. H., & Liu, S. (2017). Accounting narratives and impression management on social media. Accounting and Business Research, 47(6), 673-694. https://doi.org/10.1080/00014788.2017.1322936
Zhang, J. (2015). Voluntary information disclosure on social media. Decision Support Systems, 73, 28-36. https://doi.org/10.1016/j.dss.2015.02.018
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Revista Catarinense da Ciência Contábil
This work is licensed under a Creative Commons Attribution 4.0 International License.
The copyright for articles published in this journal belongs to the author (s), with first publication rights assigned to Revista Catarinense da Ciência Contábil. Due to appearing in this publicly accessible journal, articles are free to use, with mandatory recognition of the original authorship and initial publication in this magazine and for educational and non-commercial applications. The magazine chose to use published works for non-commercial purposes, including the right to submit or work for publicly accessible databases. The content of published articles is the sole and exclusive responsibility of the authors. - The author (s) authorize (s) a publication of the article in the journal; - The author (s) guarantee (s) that a contribution is original and unpublished and that it is not being evaluated in another magazine (s); - A magazine is not responsible for the opinions, ideas and concepts emitted in the texts, for the full responsibility of the author (s); - It is reserved to the editors or the right to make textual adjustments and to adjust the article to the publication rules.
This work is licensed under a Creative Commons Atribuição-NãoComercial-CompartilhaIgual 4.0 Internacional.
