Strategic use of executives’ social media and personal equity incentives

In recent years, an increasing number of corporate executives have become actively involved in social media communications. These executives share opinions and information on various topics, targeting investors who are increasingly attentive to information on online platforms. In this study, I examine whether executives leverage social media to maximize personal equity incentives. Specifically, I focus on the amplification of financial news by executives on their Twitter accounts on earnings announcement days. I define financial news amplification on Twitter as the number of tweets highlighting upcoming earnings announcements or disseminating news from earnings announcements.

I find that executives amplify financial information on earnings announcements when accompanied by their insider sale transactions. This incremental amplification, however, occurs only when the disclosed earnings news is positive. Furthermore, I demonstrate that executives can benefit from their amplification tactics. Their amplifications on Twitter increase market reactions when earnings announcements convey small positive news, as they cause the market to overreact. My findings suggest that personal equity incentives are a primary motivator for executives to use their personal social media accounts to amplify financial news.