Social Media Sentiments and Firm Value

Abstract

This paper examines the link between social media sentiments and firm value. Using a sample of Fortune 500 firms from 2010 to 2017, we find that positive social media sentiments increase firm value, whereas negative social media sentiments do not decrease firm value. Next, we consider the link between social media sentiments and firm value in the context of the firms’ environmental, social, and governance performance. Our main findings remain unchanged for firms with low environmental, social, and governance performance. We also find that these results are more pronounced for firms in industries with high advertising spending. Our results are supported by a series of robustness tests.

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