To Tweet or Not to Tweet? The Role of Social Media Boycotts on Stock Market Reactions

Abstract

The ability of boycotts to affect firm strategies and outcomes has long held the interest of organizational scholars. However, with the rise of social media in the last decade, our understanding of how social movements influence firms is limited as social movement research typically emphasizes the role of traditional media. The advent of social media makes it easier for informal activist organizations and even individuals to drive social movements, as well as reducing the control that traditional media outlets have over information. As a result, social movements may not be as reliant on traditional media as they have been in the past. In this paper, we develop and test theory about how social media tenor surrounding the announcement of a boycott impacts stock market reaction. We find that the stock market does react to information provided over social media, suggesting that our understanding of how social movements influence stock price returns may be limited in the social media age.