A Resource-Based View of Using Social Media for Material Disclosures

In April 2013, the Securities and Exchange Commission (SEC) provided explicit guidance to public companies regarding social media use for material disclosures. Social media use is explored in three time periods: (1) prior to public SEC scrutiny of social media, (2) after the SEC filed a formal complaint about the use of social media, and (3) after the April 2013 guidance. Regression is used to test how voluntary social media use for material disclosures is associated with trading volume. The exploratory examination includes a sample of 267 companies (741 observations) across the three time periods. Consistent with RBV theory, results show a positive association between social media use for material disclosures and market valuation only in the post-April 2013 guidance period, suggesting that value does accrue when regulatory oversight is explicit.