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Social media coverage and post-earnings announcement drift: evidence from seeking alpha

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  • Rong Ding
  • Yukun Shi
  • Hang Zhou

Abstract

In this study, we investigate how social media coverage mitigates the under-reaction to an earnings surprise captured by post-earnings announcement drift. Based on the analysis of data collected over a nine-year period from Seeking Alpha, the largest crowdsourced social media platform providing third-party-generated financial commentary and analysis in the United States, we find that the market response to an earnings surprise attenuates for firms with high coverage on Seeking Alpha prior to the earnings announcement. Furthermore, such an effect is more salient for firms with lower institutional ownership and lower press coverage. The findings are consistent with the view that higher social media coverage facilitates a timely absorption of earnings-based information by stock prices, leading to a weaker under-reaction of the market.

Suggested Citation

  • Rong Ding & Yukun Shi & Hang Zhou, 2023. "Social media coverage and post-earnings announcement drift: evidence from seeking alpha," The European Journal of Finance, Taylor & Francis Journals, vol. 29(2), pages 207-227, January.
    • Handle: RePEc:taf:eurjfi:v:29:y:2023:i:2:p:207-227
    DOI: 10.1080/1351847X.2021.2022508
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