Executive Tweets

We explore the tweeting behavior of S&P 1500 firms’ chief executive officers and chief financial officers and its market reactions from 2011 to 2018. Executives post a variety of content on Twitter, with slightly less than half of their tweets relating to business matters. We find that most executive tweets do not elicit market reactions. However, the subset of executive tweets about financial information appears to be associated with market reactions incremental to the responses to firm-issued tweets. These reactions coincide with increases in trading volume and retail investor activity. To assess whether market responses are driven by new information or by changes in perceived credibility, we develop an innovative machine-learning-based measure of content similarity between executive and firm tweets. We find stronger investor reactions when executive financial tweets are more similar to prior firm tweets, consistent with the perceived credibility mechanism. At the same time, executive financial tweets also generate market reactions in the absence of firm disclosures, supporting the new information mechanism. This paper was accepted by Suraj Srinivasan, accounting. Funding: This work is supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China Project GRF 15502618. This works was supported by the Social Sciences and Humanities Research Council of Canada Grant 435-2019-0292. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.05510 .