Do social media constrain or promote company violations?. (24th March 2021)

• Record Type: Journal Article
• Authors: Li, Jie; Yu, Li; Mei, Xiaofeng; Feng, Xu
• Is Part Of: Accounting and finance. Volume 62:Number 1(2022)
• Page Start: 31
• Page End: 70
• Publication Date: 2021-03-24
• Subjects: Social media -- Company violation -- Pressure effect -- Corporate governance -- Cognitive evaluation theory; Accounting -- Periodicals; Finance -- Periodicals; 657.05
• DOI: 10.1111/acfi.12780
• Languages: English
• ISSNs: 0810-5391

Abstract

Abstract: Using retail investor posts on the stock forum from 2008 to 2019, we study the impact of social media on the incidence of company violations. We find that social media promotes company violations, which supports the 'pressure effect' rather than the 'monitoring effect'. This conclusion holds even considering potential endogenous issues. In robustness tests, when alternative sample selection, alternative independent variables and alternative dependent variables are used, the results still show that social media promote company violations. Our study supports cognitive evaluation theory, which proposes that external pressure imposed on managers increases the likelihood of violations.