Top executives on social media and information in the capital market: Evidence from China

Social media platforms are becoming increasingly important channels for information dissemination. This study examines how microblogging by top executives affects the information environment for listed firms in an emerging market. Using a manually collected data set of Sina Weibo, one of China's most popular and largest social media platforms, we find that a board chair having a Weibo account is associated with the dissemination of more firm-specific information to the capital market. This result holds up to a battery of robustness tests, including an alternative noise-trading explanation and alternative measures of information flows and definitions of Weibo usage. We also show that the relationship between board chairs' Weibo usage and information dissemination is stronger for smaller firms, firms that went public more recently, and firms characterized by less analyst coverage. In addition, Weibo usage primarily disseminates firm-specific news rather than industry news. Finally, we document that institutional trading is an important channel through which private information is incorporated into stock prices. Findings in this study have important implications for the understanding of the role of social media in the dissemination process of corporate information and corporate communication strategy. •We examine how microblogging by top executives affects the information environment for Chinese listed firms•Board chairs with a Weibo account are associated with dissemination of more firm-specific information to the capital market•The relationship is stronger for smaller firms, firms that went public more recently, and firms with less analyst coverage•Weibo usage primarily disseminates firm-specific news rather than industry news•Institutional trading is an important channel through which private information is incorporated into stock prices