Recent research by FJRG affiliate Steph Grant (University of Washington), Brooke Elliott (University of Illinois at Urbana-Champaign), and Frank Hodge (University of Washington) highlights an important benefit of CEOs using a personal Twitter account to communicate with stakeholders. Grant and her colleagues found that managers can use Twitter to mitigate investors’ loss of trust and negative reaction that follows a negative news surprise. Investors develop more enduring trust in a firm’s CEO when that CEO communicates with them via a personal Twitter account. This trust helps temper investors’ negative reaction to subsequent negative firm news relative to when the firm’s Investor Relations communicates news via a Twitter account or when news is communicated via a website. Further, repeating the negative news via multiple tweets or retweets does not incrementally affect investors who received the news from the CEO’s Twitter account but does further negatively impact investors who received the news via other disclosure mediums.

The full-text paper, published in the Journal of Accounting Research, is available at https://doi.org/10.1111/1475-679X.12217