Management Accounting Section Midyear Meeting

Firm Responses to the Content and Emotions Expressed in Social Media Word of Mouth

• In Event: The Future and Past of Management Accounting

Abstract

This study examines the influence of content and emotional feedback expressed through social-media channels on 1) firm revenues and consumer purchasing decisions, 2) firm quality outcomes, and 3) firm operational and resource allocations. Using psychology theory as a framework and textual analyses methods, I classify web scrapings of millions of social media posts for 19 US airlines for the 2007–2019 period based on its cognitive content and emotional type. I identify social media word-of-mouth (SWOM) feedback about five quality-related themes based on their emotional type. The results show that negative and non-negative quality-related SWOM impact consumer and firm outcomes. Firm revenues and consumer volume decrease (increase) following negative (non-negative) quality-related SWOM. Firms improve quality outcomes following negative quality-related SWOM. Firms also alter the level of operations, change pricing strategies, and enhance quality-cost investments following quality-related emotional SWOM. This research highlights the usefulness of SWOM as a source of customer feedback for firms and its decision-facilitating role and provides evidence that firms incorporate both the content and emotional type of customer feedback in their management control design.

Author

• Aishwarrya Deore, Michigan State University