The value-relevance of social media activity of Finnish listed companies

Purpose - The use of social media tools by companies is common, but the links between the use of multiple social media tools by companies and stock price changes are largely unknown. Therefore, this study aims to analyze the value-relevance of social media activities on Facebook (FB), Instagram (IG), LinkedIn (LI), Twitter (TW) and YouTube (YT). Design/methodology/approach - Stock market data and hand-picked social media data in this study were collected from Finland, a small language area with consistent International Financial Reporting Standards (IFRS) reporting practices, in the expectation of better comparability and lower noise in the data.This study uses correlation, regression and factor analyses for a sample of 105 Finnish public limited companies listed on the Nasdaq Helsinki stock exchange. Findings - This paper finds evidence that social media activity is an important area of analysis and that the activity and popularity of a company in social media are value-relevant variables in forecasting stock prices. Practical implications - Not all social media activities are necessarily equally important for managers and investors. Focus on visual messages in social media is recommended. Originality/value - The findings of this study highlight the value-relevance of using multiple visual social media channels, particularly IG and YT. This paper suggests avenues for future research and for analyzing social media information.