Conditionally accepted at Journal of Accounting and Economics
Abstract: Investors increasingly turn to social media as a source of information, even as many platforms have become saturated with ideologically charged opinions in an era of political polarization. This paper examines whether ideology-driven social media opinions affect stock market responses to polarizing firm news, using boycotts of firms’ perceived stances on ideologically polarizing issues as the empirical setting. On average, polarizing boycotts are associated with a 1% (2.3%) drop in equity value over the 7 (60) trading days after gaining social media traction. Consistent with ideology-driven social media posts affecting market responses, the immediate price reaction is more negative when social media discussions are dominated by users ideologically aligned with the boycotters, particularly when their opinions are visible and financially relevant. Mediation analysis suggests that this negative association operates indirectly through overall social media sentiment towards the boycotted firms. I also find that trading volume and daily return volatility following boycotts increase when the ideological beliefs of social media users are more diverse. Together, these results suggest that ideology-driven social media opinions could influence how investors respond to polarizing firm news.
Presented at the University of Washington (2023, 2024), AAA/Deloitte Foundation/J. Michael Cook Doctoral Consortium (2023), AAA FARS Midyear Meeting (2024), George Mason University (2024), University of Georgia (2025), Arizona State University (2025), Indiana University (2025), University of Southern California (2025)
Under 2nd round review at The Accounting Review
Abstract: With social media platforms such as Twitter/X, firms can easily engage with public discourse, i.e., public conversations involving many stakeholders and topics ranging from #TacoTuesday to #StopAsianHate. We ask whether and how investors respond to corporate participation in public discourse. We find greater investor attention when firms engage with active public discourse with messages that garner high online user impressions, incremental to similarly visible firm posts not engaging with public discourse. Consistent with firms selecting into engagement they expect to go well, the average signed market response is zero or positive, although market response is negative when trending posts garner high online scrutiny. When firms engage with riskier polarizing topics, the average market response is positive, especially when their stance is aligned with stakeholders and informativeness of the engagement is likely greater. These findings broaden our understanding of firm communication and investor response to firms speaking out.
Presented at the University of Washington (2021), AAA Western Region DSFI (2022), UBC/Oregon/Washington Conference (2022)*, University of Delaware (2023)*, CUHK-Shenzhen (2024)*, George Washington University (2024)*, Tulane University (2024)*
Based on second-year summer paper
* = Presented by a co-author
Presented at Indiana University (2025), the University of Washington (2024)