The value relevance of voluntary disclosure through social media platforms: Evidence from European Union listed firms

This paper examines whether the level of voluntary disclosure through social media platforms provides value-relevant information. Economic theory suggests that information is value relevant whether it signals for something capable of increasing firm market value. Based on a sample of 200 European Union listed firms over the 2020–2022 period, we find that more voluntary disclosure through social media platforms increases firm market value, thus suggesting that it contains value-relevant information. Empirical evidence holds to several robustness checks, such as endogeneity tests, alternative regression specifications, and cross-sectional analyses. We further examine whether the level of voluntary disclosure through social media platforms influences the relation between current returns and future earnings. We find that more voluntary disclosure improves the association between current returns and future earnings to the extent that current returns are more informative about future earnings. This study adds to the growing academic debate on the role of social media usage for firm value.