Culture and the decision to adopt and use social media for corporate disclosures

Abstract

PurposeThis paper aims to examine the influence of culture on the adoption and use of social media platforms for corporate disclosures by firms in a cross-country setting.Design/methodology/approachIt is contended that social media corporate disclosure (SMCD) is culturally influenced because the primary purpose of social media is to connect people in social settings, and social settings are distinguished by their cultures. Using a sample of 1,420 firms from 36 countries and Hofstede’s cultural dimensions, this study examines the direct effects of culture on SMCD and its moderating effects on the relationship between SMCD and the agency determinants of corporate disclosure.FindingsIt is found that cultural dimensions directly affect the adoption and use of SMCD. Additionally, the agency determinants of disclosure, size, leverage and growth are positively associated with the adoption, and use of SMCD, and these associations are moderated by the cultural dimensions.Research limitations/implicationsThe Hofstede cultural dimensions are broad country-level variables based on the culture of the majority in the population. However, larger countries have many cultures. This study does not cover within-country cultural effects on SMCD. It also does not cover firm-level culture and accounting culture because these factors are derived from national culture. This study adds culture as a country-level determinant of why companies adopt and use social media.Practical implicationsThe study provides investors and policymakers with an understanding of the nature of SMCD adoption and use in different cultural settings. It also makes managers aware of which cultural settings are more amenable to SMCD.Social implicationsSocial media, by design, have social implications. Examining the role of culture in the use of social media provides societal reasons for the use of SMCD by companies.Originality/valueSince social media are interactive in form rather than simply one-way disclosure devices, this study goes beyond the realm of corporate disclosure into the less researched area of corporate communication via social media.