Technology Diffusion and Corporate Twitter Adoption Patterns

• In Event: Financial Accounting and Auditing

Abstract

We explore the factors that motivate firms to adopt and use Twitter, the most widely used social media platform. Firms can potentially benefit from social media to gain greater visibility, reduce litigation risk, or improve investor and customer relations. We hypothesize that the factors that influence technology diffusion, firm visibility, litigation risk, and product market characteristics are among the major reasons for Twitter adoptions. A comprehensive analysis of the economic determinants of Twitter adoptions is rare, in part, because of significant hurdles involved in data collection. We apply survival analysis models to a sample of all publicly-listed US firms between 2006 and 2017, comprising 202,799 firm-quarters and 18.62 million tweets. We find that, in contrast with typical technological diffusion, firms were reluctant to follow the early adoption leaders initially but joined the predecessors in later years. We also find that more visible firms - characterized by firms with large size, frequent press coverage, greater analyst following, high institutional ownership, and many shareholders, are more likely to adopt and use Twitter. We interpret this evidence as suggesting that firms actively followed by the press and investors have a greater need to control the information environment through social media. Litigation risk and firm age are also influential determinants of Twitter adoption. Perhaps not surprisingly, we also find that consumer-oriented B2C companies are significantly more likely and quicker to adopt Twitter than B2B firms.

Authors

• Atul Singh, Ball State University

• Sok-Hyon Kang, George Washington University

• Robet Savickas, George Washington University

• Amin Hosseini, George Washington University