The unintended consequence of social media criticisms: an earnings management perspective

Li, Y., Zhang, W., Urquhart, A. ORCID: https://orcid.org/0000-0001-8834-4243 and Wang, P. (2023) The unintended consequence of social media criticisms: an earnings management perspective. European Journal of Finance, 29 (1). pp. 33-57. ISSN 1466-4364 doi: 10.1080/1351847X.2022.2097885

Abstract/Summary

This paper investigates the impact of social media criticisms on financial reporting quality. Analyzing data from the leading Internet stock message board in China, we demonstrate that postings on stock message boards could promote earnings management, i.e. reducing financial transparency. This finding is further enhanced by employing the instrumental variable approach and the difference-in-differences approach and is explained by the cognitive evaluation theory. Additional analysis suggests that the positive relation between social media criticisms and earnings management cannot be attributed to a deterioration in operating performance or internal governance and is more pronounced in postings from senior users.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/105764
Identification Number/DOI	10.1080/1351847X.2022.2097885
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting
Publisher	Taylor and Francis
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