Green Disclosures? Social Media and Prosocial Behavior

• In Event: Social and Monitoring Roles of Disclosure

Abstract

This study investigates how social media reveals individuals’ demand for the disclosure of corporate prosocial behavior and whether the disclosures benefit the firms involved in such behavior (green firms). Our paper is motivated by (1) previous researchers’ call to be open to the possibility that corporate responsibility activities and related disclosures are driven by both shareholders and non-shareholder constituents (Moser and Martin 2012) and by (2) a growing interest in how recent changes in technology affects disclosure (Miller and Skinner 2015). We find that green firms are more likely to join Twitter early and have more tweets about their prosocial behavior. Accordingly, green firms attract more followers on Twitter and experience a significant increase in individual investor holdings after joining Twitter. However, the significant increase of liquidity for green firms after the adoption of Twitter is accompanied by the increase in stock return volatility. The findings suggest that disclosures of prosocial behavior on social media generate unexpected costs to the firms due to the unique profile of social media followers.

Authors

• Wenli Huang, Hong Kong Polytechnic University

• Hai Lu, University of Toronto - Rotman School of Management

• Barbara Su, University of Toronto - Rotman School of Management