Abstract
We examine the influence of corporate social responsibility on the information dissemination behavior of social media analysts (SMAs). We find that SMAs give greater coverage to the earnings announcements of socially responsible firms (SRFs) compared to other firms, particularly for good news announcements. We further investigate whether the difference in coverage for SRFs and non-SRFs is due to superior disclosure practices by SRFs or to positive affective reactions by SMAs. Consistent with an affective response, we find that articles for SRFs appear less tethered to firm fundamentals—the sentiment in SMA articles more poorly predicts future earnings surprises and is less responsive to earnings announcement news for SRFs. Market-based tests similarly suggest that SMA analyses at earnings announcements are of lower quality for SRFs and potentially impair price efficiency. Overall, we attribute our results to SMAs’ desire to view SRFs in a favorable light no matter the disclosure news.
Published Version
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