Events

Using corporate social responsibility (CSR) scores of 997 firms in the S&P 1500 index ranked by MSCI ESG STATS and a sample of 10.97 million tweets posted by these firms from 2011 through 2016, this study investigates how firms use Twitter to disseminate information about their prosocial behavior and whether they benefit from such dissemination. We find that firms with higher CSR scores attract more followers on Twitter and receive more feedback on CSR-related tweets from their Twitter followers; however, firms with lower CSR scores in the prior year post more tweets about their CSR activities. We find that, in general, bid-ask spreads and return volatility decrease after firms join Twitter, but firms with higher CSR scores benefit significantly less on these decreases than do firms with lower CSR scores, possibly due to the aggressive dissemination of CSR information on social media by firms with lower CSR scores. Our findings suggest that it is not sufficient for firms to just engage in socially responsible practices, they also need to communicate CSR information to their stakeholders. Social media is an important channel for such a purpose.