Research

Under review at Journal of Accounting and Economics

Abstract: When public companies engage with polarizing issues, they risk triggering social media boycotts, which could negatively impact their stock prices due to investors’ financial and non-financial concerns. In this study, I examine whether ideological alignment between investors and activist challengers (i.e., social media users boycotting a firm) affects investor responses to polarizing boycotts. Using Twitter users posting about cashtags to represent online investors, I determine investor ideology by the number of partisan Twitter accounts they follow and use ChatGPT to classify tweet sentiment. I find that investors express more negative sentiment towards targeted firms when they are ideologically aligned with the challengers. Content analysis of tweets suggests that investors’ assessment of boycotts’ impact can be driven by financial value, ideological values, or both. Consistent with ideology-driven Twitter discussions affecting market outcomes, investor disagreement around boycotts increases when online investor ideology is more diverse. Further, price reactions to boycotts are negative on average, and more so when more online investors are ideologically aligned with challengers. My findings reveal that social media backlash to polarizing corporate stances has stock market ramifications, and that political ideology influences how investors perceive such backlash through both financial value and ideological values channels.

Under review at Journal of Accounting Research

Abstract: With the advent of social media platforms such as Twitter, firms can easily engage with public discourse, i.e., public conversations involving many stakeholders and topics ranging from #TacoTuesday to #StopAsianHate. We ask whether corporate participation in public discourse leads to heightened investor attention, and the nature of that attention. Tapping into existing virality could bring beneficial positive attention but also costly negative attention. Using various measures of investor attention (Twitter cashtag mentions, Reddit mentions, retail trading, and total trading volume), we find greater investor attention when firms engage with active public discourse with messages that garner high online user impressions. We also find some evidence that when firms engage, they are more likely to face online scrutiny and more extreme market outcomes, especially when engaging with polarizing topics. Finally, when we consider investor preference alignment and the nature of firm engagement, we find that ESG fund ownership is more likely to increase after firms engage meaningfully with environmental trending topics, even controlling for environmental tweets unrelated to trending topics. These findings broaden our understanding of how firms communicate with stakeholders and how investors hear and respond to firms speaking out in public forums.