Exploring the Twitter Application as an Information Identificator
This journal article examines whether the organization is strategic in using social media in order to circulate and communicate key financial information to shareholders and the public. It further highlights the relationship between the extent of strategic dissemination (dependent variable) along with the direction and type of news (independent variable). The financial information includes any earnings announcements as well as other corporate news (executive turnover, board of directors) and press releases (new products/customers). The authors of the article also hypothesize that organizations are less likely to use social media platforms to communicate when the context of the news is bad such as poor financial performance or cutting jobs as opposed to using it for positive information such as new products or higher earnings. In order to establish this concept of strategic dissemination, the study exploits Twitter as the primary social-media platform for the Standard & Poor’s (S&P) 1500 organizations. The use of Twitter is strategic as it is the preferred platform and easier to identify the information content as well as the precise date and time announcements were relayed through twitter from the various organizations.
The study consists of multiple steps: Firstly, the authors use the Twitter Application Program Interface (API) in order to retrieve the full and complete information for each tweet that was made from Q1 2010 to Q1 2013 for select samples. Secondly, the authors identify tweets that fall under the scope of ‘investor relations’ and manually searching for tweets relating to earnings announcements, share repurchases, changes in management/board of directors, dividends, mergers and acquisitions, and new announcements about upcoming products, customers, and investments. Thirdly, after the data is gathered, it is then divided into three subgroups: 1) tweets that occurred on earnings announcement date known as “EA tweets”, 2) tweets that occurred days in advance to remind investors known as “preview tweets”, and 3) tweets that occurred days later to call attention of recent earnings announcements known as “rehash tweets”. The various types of tweets related to a firm’s earnings demonstrate the amount of control and flexibility that organizations have in regards to the timing of earnings dissemination over social media and indicates the organization’s ability to relay the same message multiple times over a time-span. An interesting statistic regarding the use of social media occurred within the oil and steel industry as the highest % of firms use Twitter as their primary platform to relay earnings to the public.
Based on the study conducted, it was proven that most of the organizations use Twitter to connect with retail customers as compared to various other stakeholders. Majority of the social media usage is conducted by marketing departments within organizations in an attempt to connect and engage with prospective consumers. Many of the companies have no intention of using social media platforms such as Twitter in order to disseminate earnings news to investors. By electing to be selective in regards to the use of social media, many organizations fail to build a positive and trustworthy reputation and have trouble connecting with the audience.
Some of the flaws that relate to the validity of the research conducted can be the fact that many people don’t use Twitter as it caters towards a younger age group or the fact that many users do not necessarily follow their favourite organizations from a consumer perspective. People will only follow a page if they are either anticipating new products or trying to reach the social media team in order to escalate a certain issue. Although some investors that use Twitter can be following the organization, however, that is quite uncommon. Majority of the firms use bots in order to gain followers and expand their reach, however, there are only a limited number of users that engage with the organization’s tweets. One personal incident that I can relate too was using Twitter to escalate my issue with a major retailer. The lack of customer service and poor attitude by certain staff members made me furious and hence caused me to vent my emotions and thoughts over Twitter. Within 1-2 days, I received an instant reply from the company’s social media team as well as a follow request that allowed me to communicate directly through Twitter’s direct messages feature. I was able to resolve the issue instantly and ended up deleting my original tweet in order to prevent any further negative publicity of the company. For many organizations, they have to constantly scan tweets that involve any negative publicity relating to the organization or their products/services so it can be resolved right away and prevent any damage to the brand. The problem can be solved by doing the study involving focus groups or actually verifying whether or not the people that were surveys actually answers accurately and to the best of their abilities. This will prevent any biases in the study and ensure accurate results intended for the correct purpose.
All in all, this was a very interesting journal article to read and reflect upon. When selecting an article for this assignment, I had instantly selected this one based on the title. After reading the first few pages, I was instantly hooked and wanted to read further. Being a huge social media advocate, it was very interesting to see how social media has an impact from an organization’s perspective and the various initiatives an organization takes in order to disseminate information such as their earnings to its users. Social media has been prevalent and is considered to play a crucial factor in a firm’s success. Having a strong presence and building a connection with the audience goes a long way in regards to a company’s success. The authors of this journal article conducted thorough reviews in order to access a firm’s ability to disseminate earnings news and some of the contributing factors. It appears that firms are less likely to disseminate using social media platforms such as Twitter when the news is bad/negative as opposed to when it is positive/good. In addition, organizations take into consideration their target audience and the complex nature of their investor base and size of audience. The study also analyzed some of the reasons that an organization utilizes social media and its drawbacks. The study found that oftentimes when organizations tweeted and retweeted negative earnings information, it lead to a higher outreach and information asymmetry as compared to positive earnings.
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