Social Media Engagement with the Business Press

Abstract

The spread of information through social media networks can facilitate the adoption of widespread beliefs and shift public perception. I investigate the influence of social media engagement using an important information intermediary and corporate monitor: the business press. Consistent with a reduction in awareness costs for investors, I find that social media engagement with the business press is positively associated with trading volume. However, I also find evidence that social media engagement impedes market efficiency—a result that appears to be driven by positively biased trading. Turning to the monitoring role of the business press, I find that social media engagement with the business press is associated with heightened monitoring by potential litigators and corporate boards. Finally, social media engagement appears to influence journalists directly, as higher engagement with negative articles is associated with greater monitoring in future articles.