IDEAS home Printed from
   My bibliography  Save this article

Negative News and Investor Trust: The Role of $Firm and #CEO Twitter Use




We examine how CEOs can facilitate the development of investor trust that helps mitigate the effects of negative information. Results from an experiment show that investors trust the CEO more and are more willing to invest in the firm when the CEO communicates firm news followed by a negative earnings surprise through a personal Twitter account than when the news and surprise comes from the CEO via a website or from the firm's Investor Relations Twitter account or website. A follow‐up experiment shows that repeating the negative news does not incrementally affect investors who received the news from the CEO's Twitter account, but does further negatively impact investors who received the news via other disclosure mediums, especially those who received the news via the Investor Relations Twitter account. Our results have implications for firms and executives considering the costs and benefits of communicating with investors via Twitter.

Suggested Citation

  • W. Brooke Elliott & Stephanie M. Grant & Frank D. Hodge, 2018. "Negative News and Investor Trust: The Role of $Firm and #CEO Twitter Use," Journal of Accounting Research, Wiley Blackwell, vol. 56(5), pages 1483-1519, December.
  • Handle: RePEc:bla:joares:v:56:y:2018:i:5:p:1483-1519

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Libby, Robert & Bloomfield, Robert & Nelson, Mark W., 2002. "Experimental research in financial accounting," Accounting, Organizations and Society, Elsevier, vol. 27(8), pages 775-810, November.
    2. Kormendi, Roger & Lipe, Robert, 1987. "Earnings Innovations, Earnings Persistence, and Stock Returns," The Journal of Business, University of Chicago Press, vol. 60(3), pages 323-345, July.
    3. Collins, Daniel W. & Kothari, S. P., 1989. "An analysis of intertemporal and cross-sectional determinants of earnings response coefficients," Journal of Accounting and Economics, Elsevier, vol. 11(2-3), pages 143-181, July.
    4. Jennifer R. Joe, 2003. "Why Press Coverage of a Client Influences the Audit Opinion," Journal of Accounting Research, Wiley Blackwell, vol. 41(1), pages 109-133, March.
    5. Graham, John R. & Harvey, Campbell R. & Rajgopal, Shiva, 2005. "The economic implications of corporate financial reporting," Journal of Accounting and Economics, Elsevier, vol. 40(1-3), pages 3-73, December.
    6. Hailiang Chen & Prabuddha De & Yu (Jeffrey) Hu & Byoung-Hyoun Hwang, 2014. "Wisdom of Crowds: The Value of Stock Opinions Transmitted Through Social Media," Review of Financial Studies, Society for Financial Studies, vol. 27(5), pages 1367-1403.
    7. repec:bla:joares:v:55:y:2017:i:4:p:963-994 is not listed on IDEAS
    8. repec:bla:joares:v:37:y:1999:i:2:p:415-435 is not listed on IDEAS
    9. Amy P. Hutton & Gregory S. Miller & Douglas J. Skinner, 2003. "The Role of Supplementary Statements with Management Earnings Forecasts," Journal of Accounting Research, Wiley Blackwell, vol. 41(5), pages 867-890, December.
    10. Feng Gu & John Q. Li, 2007. "The Credibility of Voluntary Disclosure and Insider Stock Transactions," Journal of Accounting Research, Wiley Blackwell, vol. 45(4), pages 771-810, September.
    11. Gregory S. Miller & Douglas J. Skinner, 2015. "The Evolving Disclosure Landscape: How Changes in Technology, the Media, and Capital Markets Are Affecting Disclosure," Journal of Accounting Research, Wiley Blackwell, vol. 53(2), pages 221-239, May.
    12. Kaplan, Andreas M. & Haenlein, Michael, 2010. "Users of the world, unite! The challenges and opportunities of Social Media," Business Horizons, Elsevier, vol. 53(1), pages 59-68, January.
    13. Lian Fen Lee & Amy P. Hutton & Susan Shu, 2015. "The Role of Social Media in the Capital Market: Evidence from Consumer Product Recalls," Journal of Accounting Research, Wiley Blackwell, vol. 53(2), pages 367-404, May.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:joares:v:56:y:2018:i:5:p:1483-1519. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.