Year-end Sale % OFF 
Abstract
We examine whether CEOs are able to influence how investors react to a negative earnings surprise by directly communicating with them via social media. Results show that investors exhibit higher levels of trust and are more willing to invest in a firm when the firm’s CEO communicates the negative news through a Twitter account than when the news comes from the CEO via a website or from the firm’s Investor Relations website or Twitter account. Further analysis reveals that direct communications from the CEO through a Twitter account help build more trust in the CEO, including a more enduring form of trust, which leads investors to discount the negative news as a one-time event. Our results have implications for the many firms and their executives who are considering the costs and benefits of directly communicating with investors via social media.
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