Social Media and Firm Equity Value.

Author List: Luo, Xueming; Zhang, Jie (Jennifer); Duan, Wenjing;
Information Systems Research, 2013, Volume 24, Issue 1, Page 146-163.
Companies have increasingly advocated social media technologies to transform businesses and improve organizational performance. This study scrutinizes the predictive relationships between social media and firm equity value, the relative effects of social media metrics compared with conventional online behavioral metrics, and the dynamics of these relationships. The results derived from vector autoregressive models suggest that social media-based metrics (Web blogs and consumer ratings) are significant leading indicators of firm equity value. Interestingly, conventional online behavioral metrics (Google searches and Web traffic) are found to have a significant yet substantially weaker predictive relationship with firm equity value than social media metrics. We also find that social media has a faster predictive value, i.e., shorter "wear-in" time, than conventional online media. These findings are robust to a consistent set of volume-based measures (total blog posts, rating volume, total page views, and search intensity). Collectively, this study proffers new insights for senior executives with respect to firm equity valuations and the transformative power of social media.
Keywords: firm equity value; online reviews; social media; stock market performance; vector autoregression; Web blogs; word of mouth
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#114 0.253 performance firm measures metrics value relationship firms results objective relationships firm's organizational traffic measure market study improve accounting measuring aggregate
#131 0.242 media social content user-generated ugc blogs study online traditional popularity suggest different discourse news making anonymity marketing videos choices page
#92 0.140 equity conventional punishment justice wisdom focus behavior fairness compliance suggest theory significant certainty misuse reward settings behavioral mandatory drawing widely
#199 0.093 reviews product online review products wom consumers consumer ratings sales word-of-mouth impact reviewers word using effect marketing helpfulness electronic commerce
#133 0.081 data predictive analytics sharing big using modeling set power inference behavior explanatory related prediction statistical generated substantially novel building million
#212 0.067 business digital strategy value transformation economy technologies paper creation digitization strategies environment focus net-enabled services processes insights challenges key response
#33 0.063 web site sites content usability page status pages metrics browsing design use web-based guidelines results implications portal loyalty navigability addition