Social media coverage and post-earnings announcement drift: evidence from seeking alpha

Ding, R., Shi, Y. and Zhou, H. (2023) Social media coverage and post-earnings announcement drift: evidence from seeking alpha. European Journal of Finance, 29(2), pp. 207-227. (doi: 10.1080/1351847X.2021.2022508)

Abstract

In this study, we investigate how social media coverage mitigates the under-reaction to an earnings surprise captured by post-earnings announcement drift. Based on the analysis of data collected over a nine-year period from Seeking Alpha, the largest crowdsourced social media platform providing third-party-generated financial commentary and analysis in the United States, we find that the market response to an earnings surprise attenuates for firms with high coverage on Seeking Alpha prior to the earnings announcement. Furthermore, such an effect is more salient for firms with lower institutional ownership and lower press coverage. The findings are consistent with the view that higher social media coverage facilitates a timely absorption of earnings-based information by stock prices, leading to a weaker under-reaction of the market.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Shi, Dr Yukun
• Authors: Ding, R., Shi, Y., and Zhou, H.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: European Journal of Finance
• Publisher: Taylor & Francis
• ISSN: 1351-847X
• ISSN (Online): 1466-4364
• Published Online: 17 January 2022
• Copyright Holders: Copyright © 2022 Informa UK Limited, trading as Taylor and Francis Group
• First Published: First published in European Journal of Finance 29(2): 207-227
• Publisher Policy: Reproduced in accordance with the publisher copyright policy