DOCSLIB.ORG

HOW Ceos' TWITTER POSTS AFFECT THEIR COMPANIES' STOC

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
HOW Ceos' TWITTER POSTS AFFECT THEIR COMPANIES' STOC Master Thesis Finance THE CHANGING DYNAMICS OF CORPORATE MESSAGING – HOW CEOs’ TWITTER POSTS AFFECT THEIR COMPANIES’ STOCK PRICES? Patrycja Napora ANR: 194087/ SNR: 2024950 Msc Finance Supervisor: dr. K. Korhan Nazliben Tilburg, August 2019 Abstract This paper investigates the impact of CEOs’ Twitter posts on companies’ stock prices and focuses specifically on the difference in abnormal returns generated by particular tweet types. The number of companies using social media as a stream of corporate disclosure is steadily growing each year, with chief executives more active in publishing the essential corporate news via their official accounts. However, not enough research examining the influence of information presented on social media on stock prices has been done. Additionally, no previous study tested whether a stock market reaction is stronger for a particular type of news shared on executives’ accounts in social media. Therefore, using a sample of 247 tweets gathered from 15 public companies’ CEOs accounts, this study illustrates the shock on the market caused by CEOs’ tweets, showing the Average Abnormal Return of 0.55% generated during the first event day. Results present that posts illustrating executive’s personal views have a bigger influencing power than tweets sharing operating performance news or demonstrating CSR activity. Personality tweets on average generated 0.52% higher abnormal returns than posts sharing information about the company’s products. What is more, results illustrate that the influencing power of a CEO increases with the frequency of publishing tweets. The popularity of a tweet, measured by the number of likes and comments that the Twitter post received also strengthens the short-term price shock on the market. Table of Contents 1. Introduction ............................................................................................................................. 1 2. Literature review ..................................................................................................................... 4 2.1. Social media impact on financial markets ...................................................................... 4 2.2. Twitter and sentiment analysis ........................................................................................ 7 2.3. CEO’s personality and firm’s performance .................................................................... 9 2.4. The long-time debate about CSR .................................................................................... 9 2.5. Research importance and novelty ................................................................................. 10 3. Hypotheses formulation ........................................................................................................ 12 4. Data and methodology .......................................................................................................... 14 4.1. Dataset........................................................................................................................... 14 4.2. Event Study Methodology ............................................................................................ 17 4.2.1 Definition and construction of the model .............................................................. 17 4.2.2 Testing for significance ......................................................................................... 20 4.3. Multivariate regression model ...................................................................................... 21 4.3.1 Dependent variable – Abnormal Returns .............................................................. 22 4.3.2 Independent Variable – the type of tweet ............................................................. 22 4.3.3 Control variables ................................................................................................... 23 4.3.4 Model construction ............................................................................................... 24 4.3.5 Significance testing ............................................................................................... 26 5. Empirical findings and discussion ........................................................................................ 27 5.1. Event study findings ..................................................................................................... 27 5.2. Regression findings ....................................................................................................... 29 5.3. Discussion ..................................................................................................................... 33 5.4. Possible limitations ....................................................................................................... 35 6. Conclusion ............................................................................................................................ 35 References ..................................................................................................................................... 37 List of Tables Table 1. Descriptive statistics - Sample CEOs Twitter accounts. Data source: Twitter ............... 15 Table 2. Summary statistics for the data sample used in the study. .............................................. 16 Table 3. Percentage distribution of tweets in the sample by the group......................................... 26 Table 4. Daily Average Abnormal Return with corresponding significance values. .................... 27 Table 5. Test for Cumulative Average Abnormal Return using the t-statistic. ............................. 29 Table 6. Robust regression results. ............................................................................................... 31 Table 7. Average returns per tweet type. ...................................................................................... 32 Table 8. Kruskal-Wallis rank test for significance. ...................................................................... 32 Table 9. The pairwise comparisons of means with equal variances test. ...................................... 33 List of Figures Figure 1. Abnormal returns distribution by the tweet type ........................................................... 17 Figure 2. The event study.............................................................................................................. 19 Figure 3. Average abnormal returns by the event day. ................................................................. 28 1. Introduction In today’s modern world, social media has become an inseparable part of our lives, and the ability to share opinions and photos in real-time has changed the way we communicate. Increased Internet activity created broadcasting networks that facilitate the exchange of information containing a large amount of data. Companies made use of this increase in Internet popularity through gradually shifting the stream of corporate disclosure to social media. In the past, all company news was presented in the form of official statements or other types of regulated reports. However, with the growth of social media popularity, this form of corporate news communication has changed. Currently, social media is an essential stream of corporate news, shared through companies’ official accounts and webpages, as well as chief executives’ social profiles. This source of communication begun to play a central role not only in reducing asymmetric information between the company and investors but also in influencing and leading the emotional response to information (Chet et al., 2014). Data gathered via social media nowadays serves as a factor predicting future stock fluctuations (Bollet et al., 2011; Sul, 2014) and supports investors’ decision-making process (Nofer and Hinz, 2015). The most visible change that came with the shift of corporate disclosure was the freedom that companies gained in the context of type and timing of presented information. This freedom resulted in new possibilities but also threats created by that power to communicate with investors directly and to give them the ability to respond to presented news. Companies’ presence in social media proved to affect not only brand reputation but also the company’s future profits (Dijkmans et al., 2015; Deephouse, 2000). The growing popularity of social media led to an increased research interest in examining the effect of announcements made on Internet social platforms on stock prices. This stream of communication proved to be a useful predictor of future market movements (Cole et al., 2015) and currency pairs returns (Zhedulev, 2015). Not only can analysis of Twitter sentiment predict a single stock movement, but also the whole index future performance. A paper by Bollen, Mao & Zeng (2011) presents that measurements of collective mood states derived from Twitter are predictive of changes in the Dow Jones Industrial Average index over time. However, as presented in a paper by Ali (2018), a comprehensive understanding of the influence of social media on stock prices is still missing. Chief executives, as the main representatives of a company, should also take advantage of this new stream of communication. However, more than half of Fortune 500 CEOs are still not active on the Internet (CEO.com, 2016). Despite the limited social media presence, CEOs can reach a broad audience due to their popularity, which may increase their influential power (Sul et al., 2014). What is more, investors’ trust in the CEO
Load more

Recommended publications
  • Social Media and Customer Engagement in Tourism: Evidence from Facebook Corporate Pages of Leading Cruise Companies
    Social Media and Customer Engagement in Tourism: Evidence from Facebook Corporate Pages of Leading Cruise Companies Giovanni Satta, Francesco Parola, Nicoletta Buratti, Luca Persico Department of Economics and Business Studies and CIELI, University of Genoa, Italy, email: [email protected] (Corresponding author), [email protected], [email protected], [email protected] Roberto Viviani email: [email protected] Department of Economics and Business Studies, University of Genoa, Italy Abstract In the last decade, an increasing number of scholars has challenged the role of Social Media Marketing (SMM) in tourism. Indeed, Social Media (SM) provide undoubted opportunities for fostering firms’ relationships with their customers, and online customer engagement (CE) has become a common objective when developing communication strategies. Although extant literature appear very rich and heterogeneous, only a limited number of scholars have explored which kind of contents, media and posting day would engage tourists on social media. Hence, a relevant literature gap still persists, as tourism companies would greatly benefit from understanding how posting strategies on major social media may foster online CE. The paper investigates the antecedents of online CE in the tourism industry by addressing the posting activities of cruise companies on their Facebook pages. For this purpose, we scrutinize the impact of post content, format and timing on online CE, modelled as liking, commenting and sharing. In particular, we test the proposed model grounding on an empirical investigation performed on 982 Facebook posts uploaded by MSC Crociere (446), Costa Crociere (331) and Royal Caribbean Cruises (205) in a period of 12 month.
    [Show full text]
  • Appendix Table of Contents
    APPENDIX TABLE OF CONTENTS Appendix A: Court of appeals opinion, April 7, 2020 ................................................... 1a Appendix B: District court opinion, August 14, 2018 ............................................ 47a Appendix C: Court of appeals opinion, January 12, 2018 .......................................... 60a Appendix D: District court opinion, September 24, 2015 ..................................... 79a Appendix E: Court of appeals order denying rehearing, June 15, 2020 ................................................ 95a APPENDIX A UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT No. 18-3667 August Term 2018 Argued: June 26, 2019 Decided: April 7, 2020 ARKANSAS TEACHER RETIREMENT SYSTEM, West Virginia Investment Management Board, Plumbers and Pipefitters Pension Group, Plaintiffs-Appellees, Pension Funds, Ilene Richman, Individually and on behalf of all others similarly situated, Plaintiffs-Appellees, Howard Sorkin, Individually and on behalf of all others similarly situated, Tikva Bochner, On behalf of herself and all others similarly situated, Dr. Ehsan Afshani, Louis Gold, Individually and on behalf of all others simi- larly situated, Thomas Draft, individually and on behalf of all others similarly situated, Consolidated Plaintiffs-Appellees v. GOLDMAN SACHS GROUP, INC., Lloyd C. Blankfein, David A. Viniar, Gary D. Cohn, Defendants-Appellants, Sarah E. Smith, Consolidated Defendant-Appellant (1a) 2a Before: WESLEY, CHIN, and SULLIVAN, Circuit Judges. This is a class action lawsuit brought by shareholders
    [Show full text]
  • Informationstation.Org Kitchen Table Economics
    INFORMATIONSTATION.ORG KITCHEN TABLE ECONOMICS First Job Fridays: Lloyd Blankfein Posted on December 18, 2015 https://informationstation.org/kitchen_table_econ/first-job-fridays-lloyd-blankfein/ When people say “Wall Street,” we im- public housing project in Brooklyn. But he recognizes a deeper importance: mediately think power and wealth. But From an early age, there were two “[You] also know what people go many of New York’s top money-movers things on Blankfein’s mind: His favorite through in the world who don’t grow weren’t born with it—they spent early baseball team, the New York Yankees, out of that, but that’s what they do for mornings and late nights working and the best way to make a living. This a living.” their way up the corporate ladder. A led the young baseball fan to the old life of luxury was something these Yankee Stadium, where he found a job Now leading one of America’s most executives earned on their own, rather as a concession vendor. recognizable investment banks, Blank- than inherited. fein applies that steady sense of humili- Selling soft drinks and peanuts in “the ty to his corporate life, “I need my boss- In our regular First Job Friday feature upper decks” was his first major respon- es’ goodwill, but I need the goodwill of on Information Station, we profile sibility, and Blankfein realized he had to my subordinates even more.” Those who American business leaders whose first take it seriously—the job was “all com- know him best praise his modesty and step on the ladder was anything but mission-based,” meaning no guarantee self-deprecating humor, an approach- “Wall Street.” of personal income.
    [Show full text]
  • A Study on How Wendy's Use Different Forms of Audience Engagement In
    Audience Engagement on Social Media – A Study on how Wendy’s Use Different Forms of Audience Engagement in their Social Media Posts Emma Kauppila Pro gradu-avhandling i engelska språket och litteraturen Handledare: Brita Wårvik Fakulteten för humaniora, psykologi och teologi Åbo Akademi (2019) ÅBO AKADEMI – FAKULTETEN FÖR HUMANIORA, PSYKOLOGI OCH TEOLOGI Abstrakt för avhandling pro gradu Ämne: Engelska språket och litteraturen Författare: Emma Kauppila Arbetets titel: Audience Engagement on Social Media – A Study on how Wendy’s Use Different Forms of Audience Engagement in their Social Media Posts Handledare: Brita Wårvik Handledare: Abstrakt: Social media have acquired important roles in both private and public matters. While creating different networks for people to connect with each other, social media also create networks where businesses can connect with their consumers and create and maintain an online relationship with them. In order to create a valuable relationship the businesses need to know how to interact with their online audience. The businesses also need to listen to their audiences so that they learn what the audience actually is expecting from the business. This leads to the need of audience engagement, i.e. interactive communication between the business and the audience. In order to create a situation where engagement is likely to take place, online users can use different forms of audience engagement in their online content. The purpose of this thesis is to study the language used online on social media and how that language can be used to create audience engagement. The research questions the thesis attempts to answer are 1. What forms of audience engagement can be found and defined? 2.
    [Show full text]
  • Chapter 14 the Political Economy of Capitalist and Alternative Social Media Christian Fuchs and Marisol Sandoval
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by WestminsterResearch Chapter 14 The Political Economy of Capitalist and Alternative Social Media Christian Fuchs and Marisol Sandoval Fuchs, Christian and Marisol Sandoval. 2015. The Political Economy of Capitalist and Alternative Social Media. In The Routledge Companion to Alternative and Community Media, ed. Chris Atton, 165-175. London: Routledge. <165> This chapter provides an overview of political economy questions that arise when discussing the relationship of capitalist and alternative social media. We begin by clarifying the notion of social media, before going on to examine aspects of the political economy of alternative media. We then apply these aspects to the realm of social media in order to discuss the relationship between capitalist and alternative social media. This includes a discussion of the contradictory character of social media in the Occupy movement. What are social media? During the past fifteen years, a number of new platforms have become prominent and now range among the 50 most-accessed World Wide Web (WWW) sites in the world (alexa.com 2013). They include: • social networking sites: Facebook (#2, founded in 2004), LinkedIn (#8, 2003), VKontakte (#22, 2006); • video-sharing platforms: YouTube (#3, 2005), XVideos (#41, 1997); • wikis: Wikipedia (#6, 2001); • blogs: Blogspot (#12, 1999), Wordpress (#15, 2003), Blogger (#38, 1999); • microblogs: Twitter (#10, 2006), Sina Weibo (#34, 2009); • online pinboards: Tumblr (#25, 2007), Pinterest (#27, 2010); and • photo-sharing sites: Instagram (#37, 2010). These platforms allow users to generate and share texts and multimedia contents and/or to collaboratively create and edit content and/or to communicate with a <166> self-defined network of contacts and friends.
    [Show full text]
  • 01 Leading a Business in a Socially Connected World
    01 Leading a business in a socially connected world COPYRIGHT MATERIAL iven this book is aimed at you, the leader, I wanted to start off by Gfocusing directlyNOT FOR on what REPRODUCTION being a leader in a socially connected world means for you. This chapter aims to provide you with insights on where social media for you as a leader fits in, why it matters and the impact that ‘being social’ can have. In fact, before we start, here’s my list of some of the clear benefits. Social media: ●● enables you to tune in and listen in ‘real time’ to your customers, your employees and what’s happening in your sector; ●● enables you to share your viewpoint, in an authentic and conver- sational way; ●● enables you to defend, speak up and mitigate misconceptions; ●● enables you to share your values and your brand’s values. As we go through the book, you’ll hear what other leaders feel are the benefits of being on social media channels – and I’ll endeavour to demonstrate all of the above with real-world examples. My viewpoint and, therefore, the stance in this book, considers that social media, as well as offering you highly practical channels to assist you with driving your business, reaches way beyond the practical application of ‘being social on social networks’ – and rather is enmeshed within the range of technologies that are fast becoming ‘social’ business as usual. M02_CARVILL_K_2558_01_C01.indd 7 1/26/2018 5:18:37 PM 8 Get Social Whilst the focus of this book is to enable you to develop your own social media strategy and tactics, it would be a disservice not to discuss the breadth and depth of social technologies, to equip you with enough compelling context to motivate you to take action and build social media strategies, tactics and activity into your already busy life.
    [Show full text]
  • How Goldman Sachs Turned the Great Recession Into Competitive Advantage Using Strategic Management
    How Goldman Sachs Turned the Great Recession into Competitive Advantage Using Strategic Management Mine Doyran The City University of New York Abstract What are the strategic questions confronting Goldman Sachs in the wake of the Great Recession? Goldman Sachs has been considered the most prestigious investment banking firm on Wall Street. Since September 2008, Goldman operates as a bank holding company and financial holding company regulated by the Federal Reserve. It gives advice on how to achieve long-term financial goals in times of both prosperity and crisis. This case reveals how Goldman Sachs became the quintessential global firm for the current period, which combines both growth and weaknesses. It further argues that Goldman Sachs has adopted innovative strategies one step ahead of its competitors, thus surviving the worst of times and redefining the traditional investment banking field. Background Founded in 1869, Goldman Sachs has been considered the most prestigious investment banking firm on Wall Street. Its clients include both public and private institutions seeking funding for expansion to meet the needs of their clients and advice on how to achieve long-term financial goals in times of both prosperity and crisis. Indeed, Goldman would be the quintessential firm for the current period, which combines both growth and weakness. Currently, Goldman Sachs operates as bank holding company and a financial holding company. It is regulated by the Board of Governors of the Federal Reserve System. It has an American depository institution subsidiary, Goldman Sachs Bank USA, which is a “New York State-chartered bank.”1 The business of investment firm includes help in planning corporate mergers, Rutgers Business Review Vol.
    [Show full text]
  • Corporate Core Values and Social Responsibility: What Really Matters to Whom
    Corporate core values and social responsibility: What really matters to whom Barchiesi, M. A., & Fronzetti Colladon, A. This is the accepted manuscript after the review process, but prior to final layout and copyediting. Please cite as: Barchiesi, M. A., & Fronzetti Colladon, A. (2021). Corporate core values and social responsibility: What really matters to whom. Technological Forecasting and Social Change, 170, 120907. https://doi.org/10.1016/j.techfore.2021.120907 This work is licensed under the Creative Commons Attribution-NonCommercial- NoDerivatives 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-nd/4.0/ or send a letter to Creative Commons, PO Box 1866, Mountain View, CA 94042, USA. 1 Corporate core values and social responsibility: What really matters to whom Barchiesi, M. A., & Fronzetti Colladon, A. Abstract This study uses an innovative measure, the Semantic Brand Score, to assess the interest of stakeholders in different company core values. Among others, we focus on corporate social responsibility (CSR) core value statements, and on the attention they receive from five categories of stakeholders (customers, company communication teams, employees, associations and media). Combining big data methods and tools of Social Network Analysis and Text Mining, we analyzed about 58,000 Italian tweets and found that different stakeholders have different prevailing interests. CSR gets much less attention than expected. Core values related to customers and employees are in the foreground.
    [Show full text]
  • Letter to Mr. Lloyd Blankfein, the Goldman Sachs Group
    December 19, 2017 Mr. Lloyd Blankfein Chairman and Chief Executive Officer The Goldman Sachs Group, Inc. 200 West Street New York, New York 10282 Dear Mr. Blankfein: On July 1, 2017, the Board of Governors of the Federal Reserve System (Board) and the Federal Deposit Insurance Corporation (FDIC) (together, the Agencies) received the annual resolution plan submission (2017 Plan) of The Goldman Sachs Group, Inc. (GS) required by section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), 12 U.S.C. § 5365(d), and the jointly issued implementing regulation, 12 CFR Part 243 and 12 CFR Part 381 (the Resolution Plan Rule). The Agencies have reviewed the 2017 Plan taking into consideration section 165(d) of the Dodd-Frank Act, the Resolution Plan Rule, the letter that the Agencies provided to GS on April 12, 2016 (the 2016 Letter) regarding GS’s 2015 resolution plan submission (2015 Plan), the joint “Guidance for 2017 Resolution Plan Submissions By Domestic Covered Companies that Submitted Resolution Plans in July 2015” (the 2017 Plan Guidance), other guidance provided by the Agencies and supervisory information available to the Agencies. 1 In reviewing the 2017 Plan, the Agencies noted meaningful improvements over prior resolution plan submissions of GS. Among other things, the Agencies reviewed the 2017 Plan with respect to the shortcomings in GS’s 2015 Plan. Based upon their review of the 2017 Plan, the Agencies have jointly decided that the 2017 Plan satisfactorily addressed these shortcomings, as discussed in section I, below. Nonetheless, the Agencies have identified one shortcoming in the 2017 Plan, as discussed in section II, below.
    [Show full text]
  • 06 LIBOR Materials
    LIBOR Item ID: 65 From: Lee, Timothy </O=EXCHANGELABS/OU=EXCHANGE ADMINISTRATIVE GROUP (FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=D9770D766B6642C4AC0F9F116D0B180D- TIMOTHY LEE> To: (b) (6) Subject: LIBOR Sent: June 29, 2012 8:16 AM Received: June 29, 2012 8:16 AM What do you think the odds are that Bob Diamond is filing for unemployment by Labor Day? ----- Timothy Lee Senior Policy Advisor 202-730-2821 [email protected] RE: LIBOR Item ID: 29 From: (b) (6) To: Lee, Timothy <[email protected]> Subject: RE: LIBOR Sent: June 29, 2012 10:28 AM Received: June 29, 2012 10:29 AM 50-50 From: Lee, Timothy [mailto:[email protected]] Sent: Friday, June 29, 2012 8:17 AM To: (b) (6) (b) (6) Subject: LIBOR What do you think the odds are that Bob Diamond is filing for unemployment by Labor Day? ----- Timothy Lee Senior Policy Advisor 202-730-2821 [email protected] Confidentiality Notice: The information in this email and any attachments may be confidential or privileged under applicable law, or otherwise protected from disclosure to anyone other than the intended recipient(s). Any use, distribution, or copying of this email, including any of its contents or attachments by any person other than the intended recipient, or for any purpose other than its intended use, is strictly prohibited. If you believe you received this email in error, please permanently delete it and any attachments, and do not save, copy, disclose, or rely on any part of the information. Please call the OIG at 202-730-4949 if you have any questions or to let us know you received this email in error.
    [Show full text]
  • Social Media Game Plan: IP and Marketing Law Playbook by Feras Mousilli and Barry M
    Social Media Game Plan: IP and Marketing Law Playbook By FeraS MousillI and Barry M. Benjamin For corporate attorneys who are still waiting for the so- cial media craze to fade away, you can no longer ignore the statistics: Two-thirds of the global internet popula- tion visit social media sites. If you believe your company can ignore the Facebook phenomenon, it would be tantamount to ignoring a market bigger than the eighth most populated country in the world. Social networking has exploded in popularity so quickly and become so ingrained in our daily lives that we can no longer think of it as “new media.” Companies hosting and participating in social media face numerous potential legal minefields — new court decisions come at a dizzying pace, often interpreting relatively new statutes that lack established precedents. Furthermore, as the line between “company time” and “personal time” blurs, companies struggle with the right balance between an employee’s free speech rights and restrictions to protect the company when the employee engages in social media. Protecting company intellectual property is yet another challenge. Whether dealing with “friendly” (fan sites) or “unfriendly” (gripe sites) situations, fashioning appropriate, consistent responses can be an arduous task. There are, however, a number of measures that can minimize risks of engag- ing in social media. ACC Docket 105 September 2010 Hosting social media — legal issues publish the problematic content, thus making the as a publisher problematic content a statement by the magazine Companies that were long content to publish itself, as opposed to the library, which merely brochure-type websites now feel compelled to provides access.
    [Show full text]
  • Your Basement Gym Is No Match for These $10 Million Wellness Amenities by Cheryl Wischhover
    September 23, 2016 Your Basement Gym Is No Match for These $10 Million Wellness Amenities By Cheryl Wischhover Photo: TriggerPhoto/Getty Images/iStockphoto These days, people aren’t above paying $40 several times a week to ride a stationary bike to nowhere, followed by another $8 to cool down with a watermelon juice. In this context, it makes sense that real-estate developers have started adding so-called wellness amenities to new buildings. The days of putting an elliptical machine and some rusty weights in a basement room and calling it a residential gym are long gone. Home buyers in New York City and beyond are settling for nothing less than 10,000-square- foot gyms with pools, hydrothermic regeneration areas, and rooftop meditation rooms. Fredrik Eklund, a NYC-based broker at Douglas Elliman and a star of the real- estate reality show Million Dollar Listing (a.k.a. the only reality show worth watching), says, “Before, wellness was a bonus. You picked a location and you got a great doorman, and on the side you had a gym or a pool. Now people’s lives center around health and wellness.” He credits Jay Wright, who designed the fitness center at 15 Central Park West (the “most powerful” building in NYC, home to Sting and Goldman Sachs CEO Lloyd Blankfein), for starting the over-the-top wellness amenity arms race in buildings. The 14,000-square-foot fitness center there, which includes a 75- foot pool, two steam rooms, and spa treatment rooms, was a standout when apartments hit the market in 2008.
    [Show full text]