Managerial Strategic Earnings Disclosure via Social Media: Evidence from 18 Million Corporate Tweets

Using a broad sample of earnings announcement tweets (EATs) constructed from 18 million corporate tweets, we document that there exists a substitute relationship between EATs and management earnings forecasts (MEFs). EATs reduce the use and improve the accuracy of MEFs and analysts' forecast for contemporaneous and subsequent quarters. Such improvement is more pronounced in the presence of negative earnings news. Furthermore, firms with EATs are associated with higher profitability, better information environment, and lower liquidity. Using textual analysis, we show that firms with positive tone of EATs are more likely to have positive earnings surprise. Overall, our findings provide novel evidence on the significant association between corporate Twitter activities and managers' strategic disclosure as well as firms' information environment and future performance.