Some Blog materials can be downloaded only by EAA ARC members. Please log in here!
The Case of Twitter and Corporate Social Responsibility Information
In a recent study, published in the European Accounting Review (EAR), Beatriz García Osma, Encarna Guillamón Saorín and I analyse Corporate Social Responsibility (CSR) communication in Twitter, and communication surrounding the release of negative news that exogenously affect CSR information in the market, with potentially damaging consequences to firm reputation and stakeholders trust.
A unique feature of social media that separates it from traditional disclosure channels is that outside stakeholders often initiate the communication. The study of social media thus permits examining whether firms seek to timely respond to stakeholders’ concerns and information demands, or if they divert attention by introducing other less controversial issues or staying silent.
We develop novel theoretical insights into CSR disclosure in social media and how firms deal with conflict in communicating with their stakeholders. This adds to the emerging literature in accounting that views external communication in a broader light, considers the importance of social media channels within firm communication strategies, and responds to recent calls for work that analyses the role of social media to build up relationships between companies and their audiences (Merkl-Davies and Brennan, 2017).
To conduct our analyses, we first identify the stakeholders initiating the communication, i.e., who talks, and differentiate between outside stakeholders (mass media, public administrations, Non-Governmental Organizations, civic associations, trade unions, or individual Twitter users) and firm insiders (corporate accounts, managers and employees). Then, we study the content of their tweets and distinguish between Core and Supplementary CSR (Gomez-Carrasco et al., 2016), i.e., what is talked about Core CSR relates to CSR information directly linked to the firm core business, while Supplementary CSR relates to information about social action, cultural, and environmental activities that are detached from the core business and usually have a marked positive bias.
Our empirical analyses focus on the Spanish banking industry in the aftermath of the financial and euro zone crisis. We choose this sector because of its high social impact and mobilization, and its long and profound crisis. Crisis periods bring to the attention of stakeholders the unflattering side of firm activities, which may prompt investigation about their cause and intense public scrutiny (Friedman & Miles, 2006).
We find that CSR is a material topic discussed in Twitter, as measured by number of tweets. Core CSR is the predominant CSR content in social media, as expected at such a critical moment in a sector with high social impact. Also consistent with our predictions, we find that firm insiders talk about Supplementary CSR. However, this does not appear to raise the interest of outside stakeholders in this type of information. Outside stakeholders consistently focus on Core CSR issues, and often include mentions to firm insiders in their tweets, which may indicate attempts to initiate conversations about Core CSR issues. This divergence is particularly evident during negative CSR events, which may cause significant reputational damage, when firm insiders keep silent or divert attention by tweeting about Supplementary CSR. Our findings suggest that legitimacy concerns drive firm insiders’ CSR information dissemination practices and that firms fail to adapt their communication strategy to outside stakeholder concerns, while keeping firm insiders’ accounts under control to implement a common discourse.
Interestingly, we find that several aspects that feature prominently in CSR annual reports, are barely mentioned in social media, not even by bank insiders. This indicates a divergence between companies and stakeholders’ interests in terms of CSR. We identify three main participants in social media: mass media, individual users, and corporate accounts. This implies that, while firms do attempt to intervene in this type of communication, individual users have a material presence, making these media difficult to control by firms.
A final issue is the emotional contagion of Twitter users by which the environment of social mobilizations enhances the feeling of corporate and even industry deception, resulting in joint reputation damage of industry members (Friedman & Miles, 2006). Our case-based evidence of legitimacy-damaging CSR events indicates such potential damages exist to other industry members.
Discover more about our study at https://www.tandfonline.com/doi/full/10.1080/09638180.2019.1708428
To cite this article: Pablo Gómez-Carrasco, Encarna Guillamón-Saorín & Beatriz García Osma (2020). Stakeholders versus Firm Communication in Social Media: The Case of Twitter and Corporate Social Responsibility Information, European Accounting Review, DOI: 10.1080/09638180.2019.1708428
Friedman, A. L. & Miles, S. (2006). Stakeholder: Theory and practice, Oxford University Press: Oxford.
Gomez-Carrasco, P., Guillamon-Saorín, E., & Garcia Osma, B. (2016). The illusion of CSR: Drawing the line between core and supplementary CSR. Sustainability Accounting, Management and Policy Journal, 7(1), 125-151.
Merkl-Davies, D.M., & Brennan, N.H. (2017). A theoretical framework of external accounting communication: Research perspectives, traditions and theories. Accounting, Auditing and Accountability Journal, 30(2), 433-469.