The impact of firms’ and CEOs’ social media usage on corporate performance

Wafa Ghardallou

doi:10.21511/imfi.18(4).2021.03

Abstract

The impact of social media usage on corporate performance has not been examined in the Saudi context. This paper aims to investigate the influence of social media, namely companies’ and CEOs’ involvement in Twitter and LinkedIn, on the profitability of Saudi Arabia listed firms. A dynamic panel estimation method is used to empirically assess this relationship. The study employs 120 firms listed on the Saudi Stock Exchange Tadawul from 2014 to 2017. Data are obtained from the companies’ annual reports. Statements of financial status as well as income statements are used to collect data on the dependent variable and control variables. The results show that having a LinkedIn official account by both the CEO and the company does not improve the enterprise performance. In contrast, companies that are active on Twitter will contribute to an increase in their short-term performance. CEOs who engage in Twitter via a high number of followers help to boost the performance of their companies in the long and short term. Hence, this paper recommends that Saudi firms should be aware that their performance could be increased by monitoring their presence on social networks and by having a strong intention to use these tools. AcknowledgmentsThis study was funded by the Deanship of Scientific Research at Princess Nourah bint Abdulrahman University through the Fast-track Research Funding Program.

Highlights

In today’s modern world, social networks usage has completely changed the way persons and companies communicate
This paper aims to investigate the influence of social media, namely companies’ and CEOs’ involvement in Twitter and LinkedIn, on the profitability of Saudi Arabia listed firms
This paper sheds light on the impact of social media usage by companies and CEOs, LinkedIn and Twitter usage, on firm performance. This question has received little research attention, especially in Saudi Arabia, even though the county is considered as an emerging economy that has the largest social media usage in the world

Summary

Introduction

In today’s modern world, social networks usage has completely changed the way persons and companies communicate. Throughout the past, firms used to communicate financial information via regular reports and official statements. Firms are increasingly encouraged to use social media because it helps to reduce asymmetric information between the company and the investors and influences the investors’ emotional response (Chen et al, 2014). In strate that firms can benefit from social netthis respect, the theory differentiates between work usage by adopting better marketing strateindividual use of social media and company gies and innovating in the management process

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Results

Conclusion