Voluntary information dissemination on Twitter around the financial reporting date –

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Voluntary information dissemination on Twitter around the

financial reporting date –

an Organizational Impression Management perspective

Author: Jennifer Lugay Student number: 1163760

University of Groningen

Faculty of Economics and Business MSc Accountancy

Supervisor: dr. Y. (Yasemin) Karaibrahimoglu Co-assessor: dr. C.A. (Carl) Huijgen

Date: 10-06-2016 Word count: 12874

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Abstract

Due to the technological advances, social media networking website like Twitter are widely being adopted by companies as a part of their marketing mix. Over the years the use of Twitter has evolved into an engagement, interactive and information platform presenting its users with many benefits, such as timeliness, scale communication and cost-efficiency. The aim of this study is to explore to what extent companies are using Twitter as a corporate communication tooling in the dissemination of additional financial information around their quarterly financial reporting date. Further, this study is also interested in the types of Organizational Impression Management strategies companies use during their communication on Twitter during this event period. Lastly, this study also assess whether the usage of Twitter as an additional communications channel differs based on the companies’ profitability. The results of the study show that Twitter has been widely adopted by all the companies in the study sample. Further, the key determinants for the level of information dissemination and the use of OIM strategies found in this study are Corporate Governance, ownership, company size, leverage and profitability.

Keywords:

Organizational impression management, corporate communication, voluntary disclosure, information asymmetry, social media, Twitter

I have fought the good fight, I have finished the race, I have kept the faith 2 Timothy 4:7-8

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Communication has proven to be an essential part in ensuring a company’s growth, development and survival. In order to keep up with the information demands from the growing number of stakeholders, companies are adopting different means to assist them in the dissemination of their corporate information.

Whether quarterly or yearly, companies are required to disclose information to their stakeholders, regarding their financial position and performance. Financial reporting takes many forms, with the most traditional ranging from the paper-based reports to press releases and notes to stockholders. Internet provided a new communication channel through social media sites such as websites, blogs or forums which contribute to a broader and timelier disclosure of information by facilitating earnings conference calls and financial information posted on a company’s corporate website. Owing to Web 2.0, the ‘new’ social media sites, like Facebook and Twitter, are quickly gaining the interest of the corporate world as a new medium for the dissemination and disclosure of financial, and other type of corporate information.

Unlike the traditional mandatory forms of financial reporting, such as the paper-based or electronical financial report on a company’s website, disclosure of financial and/or other types of corporate information disseminated through the new social media sites are not (yet) mandatory and are therefore classified as voluntary disclosure.

The purpose of voluntary disclosure is to provide adequate information to a wide spread audience for their specific use. Key factors considered when deciding to voluntary disclose information is timeliness and cost-effectiveness. Voluntary disclosure has been proven to improve accountability to shareholders, assist investors in their decision making and accurate risk assessment, contribute to fairer share prices and improve corporate image and reputation (Craven and Marston, 1999).

Social media networking sites like Facebook and Twitter are turning out to be both a cost-effective and timely medium for companies to communicate, disclose high value information, engage with their stakeholders and build or maintain their corporate reputation and image. Although social media can be praised for these aforementioned benefits, it certainly has its downside, especially when a company’s legitimacy is in question.

One company that has recently experienced the severe effects of having a social presence during a scandal was the German automaker Volkswagen (VW). In September of 2015, Volkswagen was found guilty of violating the Clean Air Pact, by cheating on their gas emission test, causing a major scandal. The EPA publicly accused the automaker of providing their cars with an algorithm which allowed them to detect when they were being tested, so that the cars would perform different then under normal conditions, in order to pass the diesel emission test. This scandal was quickly dubbed the ‘diesel dupe’ and went viral on Twitter with the hashtag, #dieselgate, trending for weeks. As a result of the enormous backlash from

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the once loyal, but then angry customers, in combination with the wide media coverage, the company’s reputation and image was damaged. As a result, VW recalled millions of cars, the chief executive M. Winterkorn resigned, the VW stock price dropped with 30% and the U.S. sales plummeted with 24.7 percent by November of that year (Davies, 2015). In an attempt to salvage the company’s reputation VW issued a series of statements, including on Twitter, acknowledging that they “... have totally screwed up” (VW boss Michael Horn), and in the process had “broken the trust of our customers and the public” (former CEO, M. Winterkorn) but that their “...most urgent task is to win back trust of the Volkswagen group- by leaving no stone unturned” (new CEO, M. Mueller) (Hotten, 2015).

In an attempt to manage the effects of the scandal and repair the damage to their reputation, VW has resorted to self-presentation strategies in their communication with the purpose of influencing and managing how the public, especially their stakeholders, perceive them. This act of self-presentation in the corporate world is known as organizational impression management (OIM). Just as impression management strategies are used as a defensive or protective mechanism, it can also be employed as an assertive strategy to enhance the desired image.

Thanks to the technology advances in the 21st century, social media has become one of the company’s most indispensable image building tools (Connolly-Ahern and Broadway, 2007). According to Joyce (2013), there is a rise in the corporate usage of social media, with Twitter being the most used for investor relations purposes. Schniederjans et. al (2013), suggested that future research should “focus on platforms that can optimize IM (impression management) by providing an efficient and cost effective means for enhancing, sustaining, and defending corporate image” (p.912).

Following the advice of these researchers, and in combination with the aforementioned benefits of the use of the new social media sites and it rising popularity as a corporate communication tool, the aim of this paper is to examine the practice of corporate voluntary information disclosure on Twitter. Furthermore, it will look into the use of OIM strategies embedded in the information that is being disseminated through this channel.

Therefore, this paper sets of to answer the following research question

To what extent does a firm make use of their Twitter account for the dissemination of information around their financial reporting date, in order to manage how they are viewed by their stakeholders?

This paper will be looking into the Twitter usage of 31 S&P 500 Information and Technology companies, around their quarterly financial reporting date, over a period of five years. Seeing that this sector is expected to be among the early adopters of technology, it provides a higher probability that these companies have adopted and incorporated Twitter in their corporate communication package.

The knowledge gained from this study will greatly contribute to the ever increasing flow of research and theoretical knowledge on the usage of new social media as a platform to manage

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corporate image (OIM). First, this study focuses on social media which is increasing in popularity among individuals, businesses and consequently among scholars. Second, other studies (Schniederjans et. al, 2013) have primarily examined the more traditional forms of social media, like blogs, forums and website, with the aim to assess the level of impact of IM strategies on financial performance. Building forth, this study seeks to gain more insight into the application of IM strategies on the ‘new’ social media site Twitter.

Finally, a more recent research (Blankespoor et. al, 2014) studied the effects on information asymmetry and market liquidity through broader information dissemination using direct-access information technologies (DAITS), like Twitter. Although this study focused on the use of Twitter, it looked at a series of different types of events. For the purpose of comparison, this study has selected one common and recurring event, financial reporting date, which is applicable to all companies. By examining the usage of Twitter around this event, over a period of time, this study sets of to provide a better comparison of the usage of Twitter among these homogenous companies.

The findings of this study shows that the level of a company’s profitability does influence the level of financial dissemination on Twitter and further the use of OIM strategies employed in their communication on Twitter. As expected by this study Profitability has a positive influence on the use of OIM strategies as a whole, but also on Organizational Promotion strategy and Exemplification strategies. Both the level of financial information dissemination on Twitter as the use of Ingratiation strategies in a company’s Twitter communication were found to be negatively related with the firm profitability.

1.1 Structure

This paper proceeds as follows. Chapter two presents an overview of the relevant literature. In chapter three the foundation of the study is laid down in the form of the theoretical background and the hypotheses development. Chapter four describes the methodology and it presents the descriptive statistics of this study. Afterwards, the results are discussed in chapter five. Finally, chapter six will present the main findings, followed by the theoretical contributions of this study and its limitations. The chapter is then concluded with some recommendations for future research.

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2. Relevant Literature

Studies of corporate information dissemination usually examine the what, when, how and/or the effects of the information disclosed. Corporate information disclosure can be classified as mandatory or voluntary. Almost a decade ago, Marston and Leow (1998) examined the level of information disclosure on the internet. This study was later updated by Craven and Marston (1999). As in the earlier study, the aim of the studies was to determine whether the companies had a website, and if so, whether they used to for financial information disclosure and finally they examined the determinant for the level of disclosure. The study found that larger companies listed on the London stock exchange, tend to engage more in financial information disclosure on the internet.

Another study that looked into the effects of the information technology developments, internet, of that time, was conducted by Oyelere et. al (2003). The researchers examined the voluntary adoption of the internet as a new medium for financial information dissemination by New Zeeland listed companies. The researchers found that firm size, industrial sector, ownership and liquidity are some of the main determinants for voluntary financial disclosure on the internet.

Both studies predicted that due to technological advances, the internet will become a new channel for corporate (financial) information dissemination. Considering the increasing usage of the internet, its interactive capabilities and multimedia abilities, they anticipated that this new medium will challenge, among others, the nature of financial reporting, its framework and its impact in society (Oyelere et. al, 2003).

Fast-forwarding a decade later to today and the corporate use of internet has become a mere basic necessity. With the further technological advances, and as predicted by the prior researchers, information disclosure on the internet has become an essential part of the corporate communication package. The development of the new social media networking sites, like Twitter, Facebook, Snapchat, LinkedIn, Instagram and Pinterest, have provided a new channel for companies to communicate and engage with their stakeholders on a greater scale. Despite the fact that the study on corporate use of social media is gaining much attention among scholars, there are relatively few studies that have paid attention to what determines the incorporation of this medium in the corporate communication package, its usage and the purpose it is intended to serve.

A non-corporate research area that has gained the interest among many scholars is the usage of social media as a crisis management tool. The use of social media during and in the aftermath of natural disasters, like the 2004 East Japan earthquake and tsunami, the Haitian earthquake relief efforts in 2010 and the 2011 floods in South East Queensland, provided researchers (Peary et. al, 2012; Muralidharan et. al, 2011; Bruns et. al, 2012) with relevant data and insight in the usage and effectiveness of this medium. These studies have found social media to be extremely helpful, effective and overwhelmingly beneficial to the cause for what it was used; the dissemination of information.

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Studies conducted from a more corporate financial perspective have researched different areas regarding social media. Mangold and Faulds (2009) presented and discussed the reasons why marketing managers should include social media in their promotion mix, while developing and executing their integrated marketing communications.

Fischer and Reuber (2010) have looked into how the use of social media by entrepreneurs may affect their effectual thinking. They conclude that entrepreneurs, who embrace social media sites like Twitter, can greatly benefit from it by creating and capitalizing on opportunities.

Another topic that has gained researchers’ interest is the prediction power of social media. Bollen, Mao and Pepe (2011) have performed a sentiment analysis of all tweets posted on Twitter and compared this to a group of events that took place around the same time. Their study shows that fluctuation of public mood levels, even if delayed, are significant correlated with events of cultural, political, economic or social nature. In another study, Bollen, Mao and Zeng (2011) set forth to investigate a possible correlation between the collective mood states collected from Twitter and the value of the Dow Jones Industrial Average (DJIA). The results of the study show that by using some text processing techniques, one can track changes in the public mood and that these changes are, although in a highly differentiated manner, influenced by different socio-cultural drivers. They further found that changes in the public mood also matched changes in de DJIA observed three to four days later.

Some more recent studies have either solely focused on the use of social media for the purpose of dissemination of information (Blankespoor et. al, 2014), or as a financial reporting tool (Alexander and Gentry, 2014).

Further, studies on the use of social media as a platform for OIM strategies, has focused on the more on the traditional channels like a corporate website (Connolly and Broadway, 2007). This study found that, in their quest for establishing credibility, companies are more likely to incorporate IM strategies where they get to present their trustworthiness and expertise to the public. Additionally, Schniederjans et. al (2013), sought to assess the impact of IM strategies on firm’s financial performance. The researchers found that the use of IM strategies on corporate websites, forums or blogs will lead to positive improvement of financial performance. Finally, although IM is a widely studied area in the field of psychology, little research has been performed from an organizational perspective like the ones mentioned above.

If not mistaken, no prior study has looked at the usage of a social media platform like Twitter, in order to assess its use as an information dissemination channel from an OIM perspective.

The aforementioned present a gap in the research conducted to this date. Therefore, building forth on the study of Connolly and Broadway (2007), this study seeks to provide further scholarship in the field of organizational IM, by exploring the use of certain IM strategies

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employed in a company’s voluntary communication on one of the most influential social networking sites, Twitter.

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3. Theoretical background and Hypothesis development

3.1 Voluntary Disclosure; Internet Financial Reporting

Financial reporting serves different purposes depending on its users. First, it assists management in their strategic and managerial decision-making by providing insight in the company’s strength, opportunities and also its weaknesses. Second, financial reporting is used by financial institutions, such as banks or other lending institutions, to determine whether they can extend a company’s loan or provide them with a new financing. Third, investors use the disclosed financial information regarding their existing or potential investments to determine the uncertainty of their current and future cash flows, which in turn allows them to value the firms. Companies employ different methods to reach their stakeholders. The most common methods used are; the annual report, quarterly report, shareholder letter, conference calls, email alerts, company website and webcasts (Ashbaugh et. al, 1999; FASB, 20001).

Even though the most common studied form of financial information dissemination has been the printed annual report, the field of Internet Financial Reporting (IFR) has gained much interest amongst scholars and researchers since the introduction on the internet (Craven and Marston, 1999; Debreceny et. al, 2002; Jones and Xiao, 2004). Debreceny et al (2002) define IFR as using internet technologies to disclose corporate performance or financial information. This medium has, and is still proving to be a key factor in the unprecedented and accelerated growth -opportunities- for many companies. In order to respond to the growth demand, companies found themselves in need of external funds, which resulted in a broader ownership base to answer to (Meek et. al, 1995).

In order to make well balanced decisions, stakeholders rely on the information that is available. This might be freely available public information or private information which is only available to a specific group of the public (Connelly et. al, 2011). As soon as there is a difference between the information known by those who hold the information (companies) and those who (stakeholders) could use the information to better their decision making, information asymmetry arises.

Furthermore, the conflicting interest of shareholders, managers and other stakeholders tend to lead to agency problems which results in more bonding and monitoring by shareholders, and as a result in higher agency costs (Craven and Marston, 1999; Watson et. al, 2002; Eng and Mak, 2003). Agency theory might give more insight and explain why companies engage in voluntary disclosure (Watson et. al, 2002). Agency theory suggests that in order to reduce agency costs and diminish the effects of information asymmetry, and correspondingly investors’ uncertainty, large companies have adopted different practices, including increasing the level of voluntary disclosure (Meek et. al 1995; Craven and Marston, 1999; Watson et. al, 2002; Debreceny et. al, 2002).

Voluntary disclosure, as opposed to mandatory disclosure, is disclosure supplementary of law requirements, accounting standards or stock exchange listing requirements, where the management chooses, of own accord, to share accounting and other type of information (strategic, financial and non-financial) presumed relevant for the users of their annual report

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(Meek et. al, 1995; Watson et. al, 2002; Eng and Mak, 2003). Voluntary (accounting) disclosures can be provided in different forms i.e. “press releases, conversations with financial analysts, letters to shareholders and the provision of additional information in annual reports” (Watson et. al, 2002, p.290).

In order to compete for funds in the international capital markets, companies choose to voluntary provide information, in excess to what is required (Debreceny et. al, 2002). Companies, particularly those participating in the international capital markets, have some additional reasons for disclosing voluntary accounting information. Leventis and Weetman (2004) found that companies, in pursue of reducing information costs, are greatly influenced in the level of voluntary disclosure by factors such as market capitalization and share yield. Other researchers in accounting, both analytical and empirical, found some major determinants for the level and quality of disclosure, such as firm characteristics, listing status, country/region, culture, equity financing, diversity in international accounting principles, ownership structure, board composition and governance strength (Meek et. al, 1995; Ashbaugh et. al, 1999; Choi and Levich, 1990; Nobes, 1998; Ho and Wong, 2001; Debreceny et. al, 2002; Eng and Mak, 2003). Factors such as (large) company size, (low) managerial and blockholder ownership all result in higher information asymmetry and thus agency cost, which in turn can be reduced by voluntary disclosure.

Although these factors were mostly studied in relation to the more traditional channels for – voluntary- disclosure, they are surely to be considered when studying voluntary disclosure on the new social sites.

Signaling theory, initially developed by Spence (1973) to explain the behavior in the labor market, may also be able to explain voluntary disclosure (Connelly et. al, 2011). According to this theory signaling arises as a reaction to information asymmetry. Key elements of the signaling theory are the signaler (i.e. insider/company), signal (i.e. information), and the receiver (i.e. outsider/stakeholder) (Connelly et. al, 2011). Signaling theory suggests that information asymmetry can be reduced when the holder (signaler) of information signals with those (receiver) who don’t have the information (Watson et. al, 2002).

Results of empirical studies show that, whether individually or simultaneously, cost of capital, agency and contracting costs can be reduced and oppositely, firm value increased as a result of increase in disclosure (Debreceny et. al, 2002; Chow and Wong-Boren, 1987; Sengupta, 1998; Frankel et. al, 1999). Notwithstanding these aforementioned benefits, disclosure activities can be costly. As a result of the geographically wide spread ownership and the increasing importance of timeliness of information, traditional printed forms of disclosure have become very costly and is meeting its own limitations (Debreceny et. al, 2002).

However, since adopting the internet as means of communication, many companies have found this medium to be a much more cost effective way to communicate with their potential and existing shareholders (Ashbaugh et. al 1999). Additionally, internet disclosure offer many other benefits such as direct access to a company’s database, special hyperlinks to multimedia sound and video, flexibility, frequency, speed, improved timeliness and verifiability, and lastly availability and accessibility of information to a variety of users (Debreceny et al, 2002; Craven and Marston, 1999).

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However, IFR also presents a certain degree of risk. First, the results of Hodge (2001) yielded sustaining evidence of a blurring effect when companies hyperlinked their audited financial statements to other corporate related data, which can cause investors to misinterpret unaudited data as being audited. Additionally, a research project sponsored by the FASB (Business Reporting Research Project 2000) concluded that, although it is of great importance to be aware of the benefits of technology and innovation, there is a necessity to protect investors and ensure orderly markets. Moreover, it is imperative that these new technological innovation and possibilities do not become a new platform where investors and other users of information can become victims of fraud and/or abuse.

Despite the risks, early studies of IFR on corporate websites, based on the benefits and thus increasing use of internet, predicted a rise in corporate voluntary disclosure on the internet (Craven and Marston, 1999; Oyelere et. al, 2003).

Seeing the high demand for real-time and easily available information, IFR on a company website can be experienced as time consuming. Users of information need to go to the specific company’s corporate website or a major investor related media source for the desired information. People, especially those with limited time, are getting more used to getting their news and other forms of relevant information selected, tailored and delivered to them through social media sites like Twitter. These types of ‘push’- messages are based on the interests of the user and pre-selected sources.

Since the reporting of financial information on the internet (IFR) through a corporate social media platform, like Twitter is not (yet) considered mandatory, it is (still) classified as voluntary disclosure.

3.2 Corporate Communication

In order to create and consequently convey the mandatory or voluntary messages to their internal and external key stakeholders, companies rely on their department of corporate communication. Corporate communication, which up until the 1970’s has been described as “public relations”, can be defined as “…a management function that offers a framework for the effective coordination of all internal and external communication with the overall purpose of establishing and maintaining favorable reputations with stakeholder groups upon which the organization is dependent” (Cornelissen, 2011, p. 5). The recent corporate- and financial crisis and globalization have proven the importance of this belief (Cornelissen, 2011, p.5). Key concepts related to corporate communication include, the organization’s mission, vision, corporate identity, corporate reputation and strategies (Hooghiemstra, 2000; Cornelissen, 2011). Out of all of these concepts, comprehension of the organization’s corporate identity is of immense value. According to Cornelissen (2011, p.10), the corporate identity is the “basic profile that an organization wants to project to all its important stakeholders groups and how it aims to be known by the various groups in terms of the corporate images and reputations that they have of the organization”.

In the last couple of years the demand for companies’ information from different stakeholders has increased (Cornelissen, 2011). Companies are expected to be transparent, honest and a

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responsible member of society. This makes upholding a good corporate identity, one of the top priorities and challenges for many companies.

3.3 Organizational Impression Management theory

The widespread of stakeholders, both nationally as internationally, along with their growing demand for information, places greater pressure on the what, when and mostly the how information is disseminated in order to ensure a favorable corporate self-presentation with the objective of upholding a certain image and or reputation.

Furthermore, based on the political-cost hypothesis, it is expected that large companies, being relatively visible to the public, have an extra motivation to amplify their reputation and image by increasing disclosure, in attempt to reduce government intervention (Debreceny et. al, 2002; Chow and Wong-Boren, 1987). Accordingly, Craven and Marston (1999) found an improved corporate reputation and/or image to be one of the five most important benefits of voluntary disclosure for British multinationals.

The practice of self-presentation, also known as impression management (IM), finds its origin within the field of social psychology and communication, dating back to “Mills’ (1940) ‘vocabularies of motive’, Goffman’s (1959) suggestion people actively manage others’ impressions of them, Jones’(1964) identification of strategic behaviors actors use to enhance theirs social attractiveness, and Tedeschi, Schlenker, and Bonoma’s (1971) theory of impression management” (Allen and Caillouet, 1994, p. 47).

This field of study attends to the various strategies employed by individuals with the purpose of creating, managing or altering how they are perceived, with the purpose of creating a desired image or to repair a damaged one (Allen and Caillouet, 1994; Hooghiemstra, 2000; Schniederjans et. al, 2013). People can either consciously or unconsciously engage in IM, through verbal communication and/or in the way they act and present themselves (Hooghiemstra, 2000).

IM, mostly observed and therefore studied at the individual level, is also applicable and occurring at organizational level (Schniederjans et. al, 2013). As a result, there is gaining interest among researchers in the field of OIM.

OIM is being applied in the field of management and accounting, i.e. to gain insight in its application within an organization facing legitimacy issues (Allen and Caillouet, 1994), also as a means to explain the extent of voluntary disclosure in single or dual language reporting (Leventis and Weetman, 2004) and to determine its effect on firm performance (Schniederjans et. al, 2013). Furthermore, individuals alike, “corporations engage in impression management in an attempt to increase the chances that they will be able to fulfill their financial and social goals, secure cooperation or support from others, vie effectively with or discourage competitors, and avoid the consequences of negative actions” (Connolly-Ahern and Broadway, 2007, p.343). Following the study of Goffman (1959), originally based on the individual, companies can also be seen as actors who are performing in various settings before an audience. Study (Elsbach and Sutton, 1992) indicates that both the strategies used, as the results obtained by companies are alike to those of individuals. OIM strategies serve two opposing purposes. First, it can enhance an actor’s image by promoting its performance. Second, in case the actor’s performance is not up to the audience’s standard and is called into

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questioning, IM serves in giving accounts explaining the situation in the hope to create understanding among the audience (Scott and Meyer, 1991, mentioned in Allen and Caillouet, 1994). Thus, by engaging in OIM the actor attempts to maximize its rewards or minimize its punishment, however deserving or not. One key factor of influence on the level of OIM strategies employed is the strength of a company’s corporate governance. Osma and Guillamón-Saorín (2011) found a strong governance to be negatively associated with IM. Even in the case of good news, strong governance will constrain the level of IM used in communicating this positive information. Another factor of influence on OIM is a company’s level of leverage (Aerts, 2005). Seeing that leverage is a risk indicator, high leveraged firms will be inclined to resort to OIM in their communication to stakeholders in order to cope with the possible effects of being high risked (Aerts, 2005).

Based on prior (O)IM research, the tactics used can be categorized in four primary strategies: assertive/proactive, defensive/protective, direct and indirect (Schniederjans et. al, 2013, p. 912). The assertive/proactive strategy is employed when an individual or organization is trying to manage a desired image, while the defensive/protective strategy is used to compensate and correct a situation that negatively affects image (Drory and Zaidman, 2007). Both previous explained strategies can be either direct or indirect. According to researchers (Mohamed et. al, 1999; Bolino et. al, 2008; in Schniederjans et. al, 2013), direct strategy is when the actor (individual/organization) presents and manages information regarding itself in order to enhance or correct its desired identity. In the case of indirect strategy, the actor presents or tries to manage information about other related activities or entities in order to maintain its assertive/proactive or defensive/protective strategy.

Actors, both individual as organizations, use various sub strategies to manage the information they are sending. When an actor desires to correct for a mistake, while at the same time enhance the more positive elements of the situation, it can resort to defensive/protective strategies such as excuses, apologies (originally recommended by Scott and Lyman, 1968) and justification (Allen and Caillouet, 1994). When an actor uses excuses, it admits wrongdoing but at the same time it refuses to take responsibility for the action and attributes the situation to external, not intended factors beyond its own control (Schlenker and Weigold, 1992; cited in Hooghiemstra, 2000). In the case of apologies the actor accepts blame for an event, while trying to convince the public that the particular event should not be perceived as a fair representation of the true character of the actor (Schlenker, 1980, cited in Hooghiemstra, 2000). Justification differs from the abovementioned strategies in that, although the actor accepts responsibility, it does not condemn the event itself, for the sake of diminishing the negativity surrounding the consequences (Hooghiemstra, 2000).

The direct-assertive strategies are organizational promotion, exemplification, ingratiation, supplication and intimidation (Schniederjans et. al (2013). The researchers, Schniederjans et. al (2013), provide a description for these five strategies. The purpose of intimidation is to appear threatening, by presenting the organization as powerful and dangerous. In the case of supplication, the actor sets itself as weak, dependent and vulnerable in order to seek support. Organizational promotion is the act of promoting one’s success and presenting itself as being highly competent. When successful, organizational promotion will result in customer interaction and action. Ingratiation entails the act of appearing attractive to an audience. The theory suggests that, if well carried out, ingratiation will enhance the attractiveness of the

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organization, resulting in possible future financial benefits in the long run (Conlon and Murray, 1996; cited in Schnierderjans et. al, 2013). Allen and Caillouet (1994) further defined three ingratiation subcategories based on the study of Jones (1964) and Jones et. al (1963); self-enhancing communication, other-enhancing communication and opinion conformity. The researchers gave the following definitions for these three sub-categories.

Companies engaging in self-enhancing communications attempt to promote their positive intentions, qualities and motives to their audience. Other-enhancing communication is aimed at the targeted audience, where the company will try to obtain approval for the organization through flattery, appreciation and approbation. Finally, opinion conformity is when the actor attempts to identify itself with the targeted audience by expressing similarity of belief, attitude and values in order to be liked (Allen and Caillouet, 1994). Exemplification is implemented by an organization which presents itself as being socially responsible, having integrity and moral values (Schniederjans et. al, 2013). This results in companies becoming more aware of the need to protect their image by being on top of and controlling all communication and contact with their stakeholders. There are many tools and platforms to be used in order to achieve this.

3.5 Twitter as corporate communication tool

When it comes to disseminating corporate information, companies have relied on the traditional paper-based communication tools (reports, pamphlets, newsletters), internet (websites, blogs, forums) and on third-party intermediaries (press, mass media) (Blankespoor et. al, 2014). Unfortunately, the press tends to focus on the more visible companies which make it difficult for many companies to get their company specific information across to their key stakeholders. Therefore, companies have looked at new technological possibilities which provides them with an (a cost-) effective, efficient and real-time-based manner to directly disseminate firm-initiated information to their stakeholders, bypassing the intermediaries (Blankespoor et. al, 2014). Even though social media platforms such as websites, blogs, chatrooms and forums have already proven successful towards this purpose, there is a phenomenon changing the way companies promote, communicate and interact with their stakeholders (Paniagua and Sapena, 2014). The new social media networking websites like Twitter, Facebook, Instagram, Pinterest, Snapchat and YouTube are rapidly gaining their place as corporate communication tools (Schniederjans et. al, 2013).

Among these, Twitter has been widely adopted by the mass media as a new source of real-time information and also as a dissemination tool. Likewise, members of the entertainment industry rely on their social to engage with their fans. For instance, in the spring of 2015, @Katyperry (American pop singer and songwriter) was the biggest Twitter account with around 66 million followers (Statista, 2016). Others, such as brands, media organizations and non-profit organizations are all finding their way to Twitter (Bruns and Burgess, 2011; Muralidharan et. al, 2011). According to researchers (Alexander and Gentry, 2014) Twitter, in particular, is rapidly gaining the interest of the corporate world. This social networking site has become one of the largest social network sites in the U.S.A., making it therefore a relevant and possibly powerful disclosure tooling (Blankespoor et. al, 2014). Research shows

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that 77 % of Fortune 500 companies are active on Twitter (Barnes et. al, 2013), 35% of U.S. financial professionals think that social media has value for their business and 56% find that social media is an emerging trend with significant future potential for their business (Statista, 2016)2.

Additionally, the amplification of the Regulation Financial disclosure (Reg. FD) may have further contributed to the increasing number of (listed) firms adopting social media.

Reg. FD, issued by the U.S. Securities and Exchange Commission (SEC) was enacted in 2000. This regulation requires firms disclosing non-public material information to a select group of people, i.e. shareholders, to do this on a large scale through a recognized channel of information distribution (Alexander and Gentry, 2014, p. 162). Seeing the increase in the amount and different types of social media, the SEC issued a revised guidance in 2008 addressing how a firm’s website might qualify to be used for public disclosure (Alexander and Gentry, 2014, p. 162). In 2013, SEC opened an investigation against Netflix CEO Reed Hastings for sharing company related information on his personal Facebook account. After the case was closed, without any charges filed, SEC issued a revised guidance Reg FD., only this time specifically addressing social media as a tool for public disclosure.

“Dave Hogan director of IR (investor relations) and corporate communications at First Financial Bankshares, notes that ‘Twitter is by far the most popular social media service for investors relations. You can use it to post short announcements about earnings releases, webcasts, acquisitions and other corporate new’ ” (Hogan, 2011, cited in Blankespoor et. al, 2014, p.85-86). Accordingly, Joyce (2013) found that this interactive platform has also been increasing in popularity among Corporate America with the highest usage rate, 72%, among all sectors for investor relations purposes (i.e. analyzing and recommending investments). Studies show that corporate use of Twitter increase the market liquidity, facilitates direct contact with stakeholders (i.e. investors), enhances accessibility and transparency (Alexander and Gentry, 2014) and enhance business performance (Paniagua and Sapena, 2014).

Twitter, as a form of OIM tool, is also being used as a way to enhance, manage and protect a company’s image (Schniederjans et. al, 2013). Furthermore, the mood on Twitter is found to have prediction power of the stock market (Bollen et. al, 2011; Zhang et. al, 2011). This can be explained by the theory of efficient markets (Fama, 1970). According to Fama (1970) prices will at any given point in time “fully reflect” the information made available to the public. Assuming this to be true, one might expect that all financial information revealed to investors will automatically be incorporated into the stock prices (Mc Williams and Siegel, 1997). Not only information disseminated through the traditional channels, but also through the social (networking) sites.

Bollen et. al (2011) found that the mood expressed on Twitter does have stock market prediction power and can in turn influence business performance. “Without doubt, Twitter and other social media have the potential to be valuable tools that, if deployed well, can positively affect business outcomes such as sales growth, brand image, and company reputation” (Fischer and Reuber, 2011, p. 16).

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3.6 Hypothesis Development

Twitter is proving to be an effective disclosure and therefore a suitable signaling tooling through which companies can employ their OIM strategies in their information dissemination. Based on signaling theory, companies experiencing a favorable event are much more likely to share this information with their audience (Osma and Guillamón-Saorín, 2011). Likewise, Singhvi and Desai (1971) suggested that the management of a company which reports a higher than average profit margin, will be inclined to disclose this information to their stakeholders in order to ensure the company’s strong financial position. Managers of profitable companies are also prone to disclose detailed favorable information in order to ensure their own positions within the company and their compensations agreements (Watson et. al (2002). Furthermore, profitable firms tend to be more subjected to public criticism and are demanded to provide transparency. In order to avoid political costs and reduce information costs, profitable firms may choose for voluntary disclosure.

Contrary to these findings, other studies have found a negative relationship between company performance and disclosure enhancements (Aerts, 2005). Additionally Leventis and Weetmand (2004), found that companies with less favorable share yields are more prone to voluntary disclosure. Based on the relationship expectation suggested by agency and signaling theory and prior research, this study assumes a positive relationship between company performance and the level and type of voluntary disclosure on Twitter.

Therefore, the first hypothesis sets of to explore the relationship between company profitability and financial information disclosure, IFR, on Twitter;

H1:

The more profitable firms tend to engage in more financial information dissemination on Twitter around their financial reporting date than the less profitable firms.

Based on the OIM theory, companies will be more inclined to boast (organizational promotion) about a favorable event in order to maximize the benefits of this event or in the case of a less favorable event, they will tend to shift the focus towards the more socially desirable objectives (exemplification) and express conformity through their values, beliefs, motives and traits (ingratiation) (Allen and Caillouet, 1994). According to Connolly-Ahern and Broadway (2007, p. 343), “all kinds of communications with a corporation’s publics constitute a very important and strategic form of impression management”. As described in the prior sections, the company size is expected to be positively related to the level of disclosure. First, disclosure is a way to reduce the cost of relatively higher level of information asymmetry. Second, it is also a way to reduce or avoid government intervention, costs and regulations (Debreceny et. al, 2002; Milne, 2002). Also, larger firms, which tend to be highly visible, have to cope with a greater demand for accountability and transparency. The former, in combination with the (future) research suggestion proposed by Schniederjans et. al (2013); “focus on platforms that can optimize IM by providing and efficient and cost effective means for enhancing, sustaining, and defending corporate image”(p. 912), form the basis for the following hypothesis.

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The second hypothesis sets forth to explore whether, and if so to what extent companies will engage in OIM strategies in their voluntary disclosure on Twitter, around their financial reporting date, contingent on their relative quarterly performance.

H2:

The more profitable firms have a higher usage level of OIM strategy in their company-initiated information dissemination on Twitter around the financial reporting date.

This study focuses solely on the tight event window surrounding the quarterly financial reporting date in order to control for other types of events that could influence the quantity and quality of information dissemination. Further, this study expects the main event to be the quarterly FR and does not anticipate any crisis events during this period. Therefore, the focus will be solely on the direct assertive strategies and it ignores the direct defensive strategies. Connolly-Ahern and Broadway (2007), who studied the application of IM strategies on the websites of 110 Fortune 500 corporations, found that out of five direct-assertive strategies, supplication and intimidation were the ones less used. Based on the classifications made by Schniederjans et. al (2013), and following the study results of Connolly-Ahern and Broadway (2007), this study will focus on three direct assertive IM strategies: organizational promotion, ingratiation and exemplification. Social media usage in the first two tactics has, among others, been proven to have a positive effect on a company’s financial performance when used (Schniederjans et. al, 2013). Furthermore, expects the same relationship between company’s performance and the use of disclosure enhancements as was discussed for H1. It is therefore that the following hypotheses, expect a positive relationship between good performance and a company’s proneness to voluntary disclose this favorable information on Twitter in order to enhance their image, ensure their financial position and maintain their competitive advantage.

H3:

Organizational promotion will be a primary OIM strategy used in the voluntary information disclosure on Twitter by companies with a relatively high quarterly performance.

H4:

Ingratiation will be a primary OIM strategy used in the voluntary information disclosure on Twitter by companies with a relatively high quarterly performance.

Exemplification, although not previously found to be directly related to financial performance, will be used in the case that a company is trying to promote their legitimacy and maintain a certain image. This study expects companies with a lower quarterly performance compared to their industry peers, will be much prone to communicate their other strengths, such as their social value, participation and responsibilities. Therefore this study explores whether companies with a relatively lower performance than their peers, will resort to exemplification strategy.

H5:

Exemplification will be the primary OIM strategies used in the voluntary information disclosure on Twitter by companies with a relatively low quarterly performance.

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4. Methodology

4.1 Sample

This research focuses primarily on two aspects; the quantification of information, financial or non-financial, shared on the corporate social media networking site, Twitter, around the financial reporting date. Further, this study explores whether, and if so to what extent the firms incorporate impression management strategies in their online communication strategy. The sampling procedure starts with the selection of the source, Twitter, from which the content will be collected for further analysis.

The sample of this study, following the procedure of Blankespoor et. al (2014, p.86), is composed of companies in the Information and Technology sector of the S&P 500. This selection is based on the following. First, according to Blankespoor et. al. (2014, p.86), it can be expected that a sample consisting out of Information and Technology firms, “which tend to be early adaptors of technology”, will help ”increase the probability of capturing Twitter users”. Furthermore, Joyce (2013, p.12) found that “the Technology sector has moved up from third highest percentage in last year’s study to number two, with 93% using Twitter for IR (investor relations)”. These facts are very promising in regards to the quantity and quality of the data to be collected. Additionally, by limiting the sample to one industry it excludes possible industry effects.

The S&P 500 constituents are assigned to a Select Sector Index based on the Global Industry Classification Standard (GICS)3. The firms classified under the GICS Information and Technology Sector & Telecommunication Services Sector, “are considered leading companies in the leading industries”4. Additionally, this sector represents the biggest sector within the index with 28.7%5. Since the S&P 500 not only focuses on the large-cap sector of the market but also incorporates a good portion of the total value of the market, it is a good representation of the market and thus also of the U.S. economy6.

Unfortunately, one great Information and Technology industry representative, Netflix, which played an important role in guidance to Reg FD., did not appear in the Datastream S&P 500 constituents list and thus was excluded from this study. Two other large, successful and well known S&P 500 technology firms, Apple and Alphabet, turned out, against expectations, not to be active on Twitter. Craven and Marston (1999, p.326) suggest that companies in the same industry tend to adopt the same level of disclosure. Not keeping up with the other companies in the specific industry, may “be interpreted as a bad market signal indicating that the firm is hiding bad news” (Craven and Marston, 1999, p.326). Therefore, in order to explore the “normal” disclosure tendencies on Twitter, within the (sub) industry of companies like Alphabet, Apple and Netflix, the choice was made to focus on the subcategory of the GICS Information and Technology sector; Internet Software.

3

http://www.investopedia.com/ask/answers/08/find-stocks-in-sp500.asp

http://www.us.spindices.com/

4

http://us.spindices.com - see S&P Dow Jones Indices -> S&P U.S. Indices Methodology 5

http://us.spindices.com - 6

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The S&P 500, GICS subcategory, Internet Software, constituents list consists of 32 companies. Companies which weren’t listed on the S&P 500 during the sample period (Leventis and Weetman, 2004), or not listed on the Data stream constituent list for the selected sample period, or those without an active official Twitter account will be excluded from the companies sample. After correcting for the previous situations, the final sample consists out of 31 companies7.

Following the study performed by Bharadwaj et. al (1999), the sample period for this study is five years. The necessary data will be collected for the quarterly financial reporting periods for the years 2010 up to 2014. By researching each quarter separately, it increases the amount of data and the chances of finding a statistical variance in the results. Furthermore, by starting the sample period from the year 2010 it ensures a greater data sample, seeing that most companies in the sample have joined Twitter between the years 2007-2011. Moreover, by starting the period two years after the first guidance issued by the SEC in 2008 and ending the period one year after the second guidance in 2013, this study want to assess the effects of this regulation on the Twitter usage by companies. Ending the sample period more than a year after revision of this regulation will most surely yield interesting results as we expect these early adopters firms to make good use of this opportunity.

4.2 Data Collection

The company sample will be divided into two categories for means of comparability of findings. Since the companies do not differ on the basis of industry, they will be divided on the basis of their performance in relation to their industry peers. Researchers found that certain types of financial ratios and profitability will be disclosed by companies who seek to highlight certain (favorable) aspects of their company performance (Watson et al, 2002).

A good market-based measure for a company’s profitability is the Tobin’s q (Q) (Huselid, 1995). This ratio has been widely used in the literature as a firm performance indicator (Bharadwaj et. al, 1999; Wernerfelt & Montgomery, 1988). This ratio has the preference over many of the accounting measures that are generally used in research. Accounting measures have been found not to be a good measure for firm performance seeing that it can easily be manipulated by the use of different procedures, and/or it may differ as a result of measurement error and adjustment of depreciation (Huselid, 1995; Wernerfelt & Montgomery, 1988; Mc Williams & Siegel, 1997 cited from Benston, 1982, p. 626). For this reason this study will use a measure of the company’s Q to measure performance.

Besides the different uses for the Q, there are also different versions of calculation, many of which are based on the version presented by Lindenberg and Ross (1981, cited in Lang & Stulz, 1993). Without doing injustice to the slightly more extensive calculation version by Lindenberg and Ross (1981), the slightly simplified Q is measured by the ratio of the Market value of the firm to the replacement value of its assets (Lang & Stulz, 1993).

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The quarterly Q for each company was directly collected from Data stream. Data stream provides a pre-defined Q variable. The quarterly company Q’s in a ratio measure, will be used as the independent variable to test the hypotheses. Further, for the classification of the companies in the profitable or the less profitable group, a total group average Q was calculated of all the companies’ Q’s for each specific quarter. The companies were then classified for each specific quarter in either the above (labeled as profitable) or below (labeled as less profitable) average group. This classification will be used for testing the hypotheses. The twitter data collection process starts off witch a search on the company’s official website for a mention of or a link to their official Twitter account (Blankespoor et. al, 2014). If this was missing, the search proceeded on Twitter itself or by using the search engine Google. Some firm’s had different Twitter accounts for different communication purposes8

. In such cases, the choice was made for the official Twitter account where financial information is more likely to be communicated. In the case that a Twitter account was not specifically mentioned on the website, the authenticity of the found account was verified by looking for the blue verified badge on Twitter 9. Further, only tweets that have been initiated by the company was counted and analyzed. Tweets posted as a reaction to another user’s message, identified by the @reply sign, were not taken into the sample. The reason for this is that the latter type of tweets are (usually) not part of a company’s pre-defined communication strategy. Additionally, these reply tweets will not be visible on the main Twitter timeline for all the company’s followers to see, where it could convey a certain type of message to all stakeholders. If a company should decide that a reply to a message posted by another account, deemed important for all stakeholders, it might decide to post a new tweet conveying the desired message and thus response.

Once tweeting activity has been confirmed, the total number of followers and the join date were registered. The Twitter data collection was performed manually using Twitter Advanced Search. Content analysis was used to document the quantification of information in the Tweets and the OIM strategies used. This analysis consisted of two parts. First, the tweet was classified as containing financial information if it had mention of the quarterly reporting information, such as the revenue, profit, acquisitions and share prices. When lacking this type of information, the tweet was classified as not containing financial information. The second step in the content analysis was performed by coding each tweet as having one, or none, of the OIM strategies. Multiple coding was avoided for the OIM tweet analysis. In case of possible multiple coding of a message, the choice was made for strongest type of message conveyed to the stakeholders and thus the strategy type used. Unlike prior studies (Osma and Guillamón-Saorín, 2011; Allen and Caillouet, 1994) where the content analysis was performed by two or more coders, the data collection was carried out by only the researcher. To control for this limitations, some of earlier coded content were re-analyzed to check if coding is in line with the rest of the coded sample. Following the study of Allen and Caillouet (1994), the analysis of OIM strategies was performed by setting a pre-defined list of words and the types of

8

Ebay has @eBay, an account used for questions and engagement with followers and @eBayNewsroom an account specific for firm’s news.

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messages for each OIM strategy, after a pre-coding analysis was performed of the tweets the study sample companies posted around their financial reporting date.

The event window, as used by Blankespoor et. al (2014), is defined as the three-day period around the financial reporting date; from financial reporting date -1, to financial reporting day +1. The financial reporting dates are collected from Data stream. The pre-period is defined as the period 30 days before the event-window (Blankespoor et. al, 2014).

Dependent and independent variables

The dependent variables were all collected from Twitter where they were coded and aggregated per relevant category. A tweet was first coded as having financial information or not. Afterwards the same tweet was coded for one of the OIM strategies. If the tweet lacked any of these strategies, it was coded as not having OIM strategies. Per event window period the total amount of financial tweets and OIM (separate per strategy) was aggregated. For the purpose of comparison, the average tweets were calculated per independent variable, by dividing the total event period tweet, i.e. financial tweets, by the total amount of tweets posted during the three day event period. This average amount was further used to test the hypotheses.

As aforementioned, the company performance, measured by the Tobin’s Q ratio, is used as the independent variable for testing the hypotheses. Profitability is the only independent variable used. Further, to test the hypothesis the following control and dummy variables will be used. Firm specific and market-related characteristics are controlled by company size measured by total assets, corporate governance, ownership, and leverage (Gruber et. al, 2015). The data for all of these variables were downloaded from Data stream.

Total assets are measured by Ln total assets (Aerts, 2005; Watson et al, 2002; Osma and Guillamón-Saorín, 2011). Prior research provides supporting evidence of the relationship between company size and the level of disclosure. Arguments supporting this relationship are; high level of information asymmetry, agency costs, political costs and business complexity (Aerts, 2005; Watson et al, 2002).

Corporate Governance is measured by a total Governance Score and a dummy variable that defines if the chairman of the board was a CEO (Osma and Guillamón-Saorín, 2011). The dummy variable was labeled as 0 in case the Chairman was not a CEO, and 1 otherwise. Companies with a strong governance are less prone to manipulation and have a higher level of precision (Osma and Guillamón-Saorín, 2011). Ownership is measured by measure of closely held shares. Closely held shares are held by a small number of shareholders. These shareholders are either directly connected to a majority shareholder or with the management or the company. The lower the percentage closely held shares, the more information asymmetry is expected and therefore the more voluntary disclosure. And the last control variable, leverage was measured by dividing the total liabilities by total assets. According to Aerts (2005), leverage indicates the level of risk of a company. In order to compensate for a less then favorable perception of the company, managers might be inclined to use more OIM strategies.

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Furthermore, besides the one corporate governance dummy, ‘Chairman was CEO’, another dummy was used for the hypotheses H2 up to H5. This dummy variable, Community Reputation reporting, controls for corporate governance characteristics. This variable takes the value of 0 if the company does not have a community reputation reporting, and 1 if otherwise.

4.3 Data analysis

The hypotheses are all set to test the relationship between one dependent, one independent variable and some control variables. The hypotheses were tested by multiple linear regressions. Such an approach is in accordance with studies conducted by Aerts (2005) and Leventis and Weetman (2004).

Descriptive analysis

Our data sample consisted of 31 companies. The total number of data collection points was 620, this is 4 yearly quarters, during a period of years for a total of 31 companies. Seeing that not all companies have been tweeting since the beginning of the sample period, our study has some missing data for some of the quarters.

Table 1 presents the descriptives of the Twitter data collection for the study sample. Based on the profitability classification, there were 15 companies classified as profitable and 15 as less profitable. Because of some missing quarterly tweeting activities, the amount of quarterly data collection points was 317 for the less profitable companies, compared to 250 for the profitable companies. Further, the table also shows that the less profitable companies have a higher mean tweeting activity during a period of 60 days, compared to the profitable firms, 86 vs. 83 respectively. The profitable firms are found tweeting slightly more during the event period, 15 vs 14 tweets.

Table 1

Descriptives Twitter Data Collection

S&P 500 Profitability Classification S&P 500 Companies Tweets 60 days pre- event Tweets event period Average Financial Tweets Average Organizational Promotion Tweets Average Exemplification Tweets Average Ingratiation Tweets Average OIM Tweets Less Profitable N Valid 15 317 317 317 317 317 317 286 Missing 33 33 33 33 33 33 64 Mean 86,45 14,81 ,1019 ,0560 ,0465 ,0881 ,2112 Median 52,00 11,00 ,0000 ,0000 ,0000 ,0408 ,1498 Std. Deviation 105,093 14,446 ,20282 ,11781 ,11508 ,14511 ,22805 Profitable N Valid 15 250 250 250 250 250 250 236 Missing 10 10 10 10 10 10 24 Mean 83,11 15,08 ,1075 ,0797 ,0519 ,0939 ,2388 Median 48,00 11,00 ,0000 ,0000 ,0000 ,0556 ,1802 Std. Deviation 79,729 14,719 ,18800 ,11562 ,17152 ,13390 ,22884 Missing N Missing 10 10 10 10 10 10 10

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Table 2 presents the descriptive and correlations of the dependent and independent variables used in the regression analyses. Further tests were performed to check for the normality of the data, multicollinearity and other regression method related assumption. None of the assumptions were violated, which made it possible to perform the regression tests.

The results in table 2 show some small but significant correlation between certain independent and dependent variables. There was a small positive correlation between noticeable between the level of firm Profitability and the use of Organizational Promotion strategy, r = 0.118. Total Assets slightly correlated, but negatively, r = -0.65, with the dissemination of financial information in tweets posted around the financial reporting date. Both the Leverage as the percentage of Closely Held Shares had a small, positive correlation with the amount of financial tweets (r = 0.11; r = 0.143). Closely held shares had a further significant correlation with the use of Organizational Promotion in the tweets, r = 0.143. Corporate Governance presents, as expected a negative significant correlation with the amount of Organization Impression Management tweets posted during the event period, r = -0.117. A moderate correlation is found for the significant correlation between Community Reputation Monitoring and total assets, r = 0.318. Since larger companies will have more information asymmetry and have higher transparency demand, these companies may want to monitor their reputation.

Table 2

Correlations, Mean and SD of Dependent and Independent variables

Mean SD N 1 2 3 4 5 6 7 8 9 10 11 1 Av. Financial Tweets ,1044 (0.17) 562 2 Av. Organizational Promotion Tweets ,0664 (0,18) 562 ,076 3 Av. Exemplification Tweets ,0489 (0,14) 562 -,014 -,031 4 Average IngratiationTweets ,0907 (0,14) 567 ,108* ,033 -,052 5 Average OIM tweets ,2237 (0,23) 522 ,058 ,497** ,576** ,581** 6 Profitability 2,2128 (1,08) 610 -,003 ,118** -,014 ,015 ,039 7 Total Assets 16,20 (0,53) 620 -,105* -,067 ,042 -,068 -,015 -,336** 8 Leverage ,5258 (0,23) 620 ,110** -,079 ,080 ,012 ,020 -,175** ,074 9 Closely Held Shares 4,5487 (6,81) 576 ,143** ,122** -,004 -,083 -,010 ,033 ,143** -,052 10 Corporate Governance Score 78,17 (13,47) 601 ,063 -,044 -,046 -,055 -,177** -,081* ,085* ,208** -,023 11 Chairman was CEO 0,5210 (0,50) 576 ,026 -,038 ,074 ,042 ,052 -,002 -,019 ,012 -,048 ,046 12 Community Reputation Monitoring ,3200 (0,466 601 -,054 ,052 -,046 ,003 -,016 -,020 ,318** -,054 ,011 ,417** -,175**

*. Correlation is significant at the 0.05 level (2-tailed). **. Correlation is significant at the 0.01 level (2-tailed).

Voluntary information dissemination on Twitter around the financial reporting date –