Can Social Media Improve The Efficiency Of Market Information And Corporate Investment

Extensive studies show that traditional media such as newspapers and magazines,as the company's external institution,has a significant impact on the securities market and corporate governance by virtue of its advantage of delivering corporate information to the public.However,in the current Internet era,wechat,microblog and other social media applications have become increasingly popular.They not only initiate a great change in information dissemination,but also gain more attention than traditional media.Social media has become an important channel for public information access and communication.So can social media play the same or even stronger role in the securities market and corporate governance?From the perspective of the efficiency of market information and capital allocation,this paper analyzes the value of social media in securities market and corporate governance.Firstly,information efficiency is the basis of the operation of the securities market and the level of information efficiency depends on how much real corporate information is contained in securities price,that is,stock price informativeness.Secondly,the internal mechanism of the securities market operation is that price guides the allocation of capital.And the improvement in efficiency of the market capital allocation ultimately relies on the realization of rational capital allocation within the company,that is,corporate effective investment.Unfortunately,due to the information asymmetry and agency problem,inefficient corporate investment often exists.Therefore,this paper explores whether social media can improve stock price informativess and alleviate inefficient corporate investment.We collect data from Sina microblog to construct the variable,corporate attention under social media,and then apply empirical research method to explore the relationship among corporate attention under social media,stock price informativeness and inefficient corporate investment.The results show that social media can improve the efficiency of market information and corporate investment.Considering the possible interaction between social media and traditional media,we add traditional media variable to further examine the mechanism of social media.The results confirm the independent influence of social media on stock price information and inefficient investment.We also find that in the aspect of improving investment efficiency,social media can take over traditional media.Finally,policy suggestions are put forward.