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This paper examines how voluntary corporate disclosure on social media platforms affects stock price synchronicity. We apply the textual analysis method to examine Chinese listed firms’ disclosure on WeChat, the most popular social media site in China. The study finds that the firm’s establishment of an official WeChat account is associated with decreased stock price synchronicity and a more positive disclosure tone results in an even lower stock price synchronicity. We also document that the impact of the disclosure tone on stock price synchronicity is less salient among firms with more analysts following, but more significant in non-state-owned enterprises and firms with lower earnings quality. Our additional analyses also reveal that the influence of disclosure tone on stock price synchronicity varies with disclosure contents. Overall, the paper verifies that corporations’ voluntary disclosure on social media reduces information asymmetry and improves market efficiency, and the effect varies with the firm’s information quality and environment.
Yuanlong He, The College at Brockport, SUNY
Lerong He, The College at Brockport, SUNY
Bing Wang, Fuzhou University
Yinan Lin, Fuzhou University