Abstract:

Using Newsweek magazine's rankings of firms' environmental performance, this study investigates how green firms disclose prosocial behavior on Twitter and whether they benefit from such disclosure.We find that green firms are more likely to join Twitter early and have more tweets about their prosocial behavior.Accordingly,green firms attract more followers on Twitter and experience a significant increase in individual investor holdings after joining Twitter. However, the significant increase of liquidity for green firms after the adoption of Twitter is accompanied by the increase in stock return volatility.The findings suggest that disclosures of prosocial behavior on social media generate unexpected costs to the firms due to the unique profile of social media followers.

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