The impact of social media followers on corporate value: An investigation of Australian firms

Abstract

With social media user numbers reaching billions, firms seek to partake in the benefits of investing into social media activities. Existing literature, however, provides little insight as to whether investment in social media adds value for corporations. In particular, it remains difficult to quantify the financial benefits for firms from social media activities. Prior research found uncertainty for small and large firms on whether value is derived from the information present on social media and the access to the large number of users. Based on a sample of 74 listed Australian firms for an observation period of 30 days of June 2016, this study examines the relationship between the firm’s social media activities on Facebook, LinkedIn and Twitter and corporate value. The results show that a firm’s social media presence on LinkedIn has a significant effect on the share return of firms, while a social media presence on Facebook and Twitter did not provide statistically significant results. Interestingly, the study also found that there is a difference between B2B and B2C firms, confirming a significant impact between for B2C firms on LinkedIn and share returns. The findings are useful for corporate managers and social media activists trying to understand the financial impacts of social media on corporate value.