Retail Investors' Perceptions of Financial Disclosures on Social Media: An Experimental Investigation Using Twitter

• Main Author: Snow, Neal Michael
• Format: Others
• Published: Scholar Commons 2015
• Subjects: product-channel fit; elaboration likelihood model; non-professional investor; management credibility; persuasion; Accounting; Business
• Online Access: http://scholarcommons.usf.edu/etd/5880; http://scholarcommons.usf.edu/cgi/viewcontent.cgi?article=7076&context=etd

Historically, companies disseminated financial information via the press release. The ability to disseminate information now exists on multiple "new media" channels beyond just the press release, with each channel reaching a different audience. With the different channels of communication come different connotations and associations that people have about the channels, which may affect the interpretation of the message, thereby altering management's ability to effectively communicate with stakeholders. I investigate whether retail investors' processing of financial information disclosures is dependent upon the fit between the channel and the type of information sent on the channel. Using the Elaboration Likelihood Model, I experimentally test how good and bad financial information posted on a social media channel, Twitter, compares to a more traditional channel, a company investor relations page where financial information is traditionally posted. I find that Twitter is associated with investors processing financial information unconsciously on the peripheral route while conscious or central route processing is associated with information coming from the company's investor relations page. Additionally, I find that investors have lower perceptions of management credibility after viewing financial disclosures on a company's Twitter feed than after viewing the same disclosures on the company's investor relations page.