The Power of Stakeholders' Voice: The Effects of Social Media Activism on Stock Markets

Abstract

Building on social movement theory, this study assesses the influence of social media activism on the stock market performance of targeted firms. We focus on information published on Twitter by two critical stakeholders: consumer associations and trade unions. To the extent that social media represent a valid medium to mobilize stakeholders' activism, protests on Twitter may damage firm reputation, leading to capital market reactions. Using a corpus of over 1.5 million tweets referring to Spanish listed banks, we study the impact of activism by looking at targeted firms' abnormal variations in price and trading volume. Our findings suggest that the Twitter activism of key stakeholders has a significant impact on investors' decisions. Further, our empirical analyses indicate that the mechanisms affecting investors' behavior differ depending on the characteristics of the stakeholder group. Hence, this study contributes to understanding how social movements influence corporate behavior via social media. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

The relationship between corporate social responsibility and sustainable financial performance: firm‐level evidence from Taiwan

“…Servaes and Tamayo () find that CSR awareness among the public can have a positive effect on firm value. Gomez‐Carrasco and Michelon () also document that Twitter activism of key stakeholders has a significant impact on investors' decisions, and that organisations affect investors' decisions through their visibility. Thus, SVI is also included as a control variable; Drake et al () use SVI as a proxy for investor attention for the company in the stock market.…”

“…Doluca, Wagner, and Block () investigate the relationship between family firms, environment and social responsibility, and find that family firms are less likely than other firms to implement environment‐related activities and innovations in early diffusion phases, but catch up with non‐family firms later. Gomez‐Carrasco and Michelon () investigate how social movements influence corporate behaviour via social media and find that the Twitter activism of key stakeholders has a significant impact on investors' decisions. Using information published on Twitter in a different manner to Gomez‐Carrasco and Michelon (), this study focuses on Google Search Volume Index (SVI) data for firms' abbreviated name and stock identification codes as measures of investor attention proxy for each specific company.…”

“…Gomez‐Carrasco and Michelon () investigate how social movements influence corporate behaviour via social media and find that the Twitter activism of key stakeholders has a significant impact on investors' decisions. Using information published on Twitter in a different manner to Gomez‐Carrasco and Michelon (), this study focuses on Google Search Volume Index (SVI) data for firms' abbreviated name and stock identification codes as measures of investor attention proxy for each specific company. The interaction term is also constructed to account for any potential relationship between CSR and a firm's negative news, SVI, board ownership and family business.…”

Unleashing the Power of Networks: Shareholder Activism, Sustainable Development and Corporate Environmental Policy

“…Businesses are often challenged by social movements. For example, Gomez‐Carrasco and Michelon () found that social media activism of key stakeholders powerfully influences investors’ decisions and stock markets. Shareholder activism is a significant part of activism that can influence business strategy.…”

Visualizing the triple bottom line: A large‐scale automated visual content analysis of European corporations' website and social media images

“…However, despite numerous empirical analyses of textual contents of CSR websites and Twitter (e.g., Araujo & Kollat, 2018;Gomez-Carrasco & Michelon, 2017;Tang et al, 2015;Vollero, Conte, Siano, & Covucci, 2019), the same empirical insight is not available for images on the same channels. This paper aims to fill this gap with a particular focus on the comparison between owned and shared media (Macnamara et al, 2016) While automated methods for text analysis have been employed for quite some time (Boumans & Trilling, 2016), the same method has not been available for large amounts of images.…”