Social media information and analyst forecasts

Purpose The purpose of this paper is to examine whether corporate social media information helps improve analysts' forecast accuracy. Design/methodology/approach This study uses hand-collected information on S&P 500 firms' official Facebook pages and uses posts and reactions to such posts to measure corporate Facebook information. Multivariate regression models are estimated to test the relationship between analysts' forecast accuracy and corporate Facebook information. Findings The results indicate that analysts forecast accuracy is unresponsive to posts. However, analyst forecast errors are decreasing in reactions to posts. These findings are robust to the inclusion of control variables, firm and time fixed effects, and alternative specifications of forecast errors and different pre-forecast time windows. Originality/value This study makes an important contribution to the literature by separating the information dissemination role of social media from information generation role and establishes the first evidence on how corporate social media information affects forecast accuracy of financial analysts.