Social Media Attention and Earnings Management: Evidence from China

• In Event: Nonprofit and International Research

Abstract

Social media have become an essential access to company information for investors. In this paper, we use data of Chinese A-share listed companies in the Shenzhen Stock Exchange from 2010 to 2015 to investigate the roles of social media on earnings management, as well as the moderating effects of corporate governance and ownership on such roles. The empirical results show that social media play a “market pressure” role on earnings management, which means that accrual-based earnings management and real earnings management are positively associated with social media attention. We also find that effective corporate governance and non- state ownership can both decrease the positive correlation between social media attention and accrual-based earnings management, yet such moderation effect is not observed for real earnings management. This paper contributes to the previous literature on the roles of media and earnings management by highlighting the “market pressure” role of social media in emerging market economies, which also has important implications for policymakers.

Authors

• Peng Wu, Southeast University

• Shan Lu, Southeast University

• Claire Deng, Ryerson University

• Jie Gao, Southeast University