Pump it Up? Tweeting to Manage Investor Attention to Earnings News

(with Vineet Bhagwat)

We examine how firms' tweeting behavior affects earnings-news returns. Tweeting about earnings news increases the magnitude of announcement returns, particularly when the earnings surprise is small and positive and when the firm is less visible as measured by firm size or analyst coverage. We also find evidence of strategic tweeting, particularly by firms that manage earnings: financial tweeting is more frequent around positive earnings surprises, especially those that are less visible. Overall, we conclude Twitter provides firms an effective and strategic way to mitigate investors' limited attention to news, especially when the news is otherwise less likely to attract notice.

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