This paper studies the joint importance of dissemination and the structure of firms’ information networks in the pricing of value relevant financial information. I first document that disruptions to the dissemination of information on Twitter.com cause the market to react less to earnings news. Using ten staggered Twitter outages, which are short-lived, random occurrences whose timings are unpredictable, I find that firms releasing earnings before Twitter outages experience lower trading volume and lower absolute market returns for the duration of the outages. Next, I analyze the spread of earnings news conditional on the structure of the underlying information network. For each firm-quarter observation, I identify central nodes that send the earnings news to more Twitter users than any other node. I show that a Twitter outage has no effect on volume and price reactions when it occurs after the central node broadcasted earnings news. This finding suggests that the dissemination of earnings news made by central nodes reaches the majority of interested investors who quickly react to the information. Taken together, these results underscore the importance of dissemination as well as the importance of the ability of firms’ information networks to relay earnings news to its investors.

Creator

• Zhang, Valerie Xiao Yue

DOI

• https://doi.org/10.21985/n2-aaw6-sn92

Subject

• Accounting

Language

• en

Alternate Identifier

• etdadmin_upload_902484
• http://dissertations.umi.com/northwestern:16070

Date created

• 2022-01-01

Resource type

• Dissertation

Rights statement

• In Copyright