How Do Investor Relations Related Disclosures on Facebook Contribute to a Company's Information Environment?

Abstract

Prior studies have investigated a wide variety of issues about social media. However, our understanding regarding what firms disclose about investor relations through social media and how such disclosures relate to a firm's information environment is limited. Using a sample of the S&P 500 firms, we explore the types of information about investor relations disclosed on Facebook. Our study first shows that 58% of the S&P 500 firms have official Facebook accounts and 566 pieces of investor relations information are disclosed on Facebook from October 1, 2012 to September 30, 2013. Financial information, such as earnings, profit, and sales, is the most common type of disclosed information while trading information is the least. In addition, we demonstrate that Facebook disclosures are positively associated with the number of analysts following the firm, except for disclosures about corporate social responsibility (CSR)/corporate governance. Differently, Facebook disclosures are negatively related to individual investors' holdings of the firm, especially for disclosures about financial information and investor services. To the best of the authors' knowledge, this is the first study that investigates the information about investor relations disclosed on Facebook. The findings can serve as the basis for future studies about disclosing information through social media channels.