Social Media Coverage and Future Strategic Alliances

Speaker: Buhui Qiu 

Venue: Room 530, No. 7 Chengjun Building, Zijingang Campus

Abstract: We examine whether specialized investment social media shapes firm boundaries by promoting the formation of strategic alliances. Using Seeking Alpha coverage initiation as a shock to a firm’s information environment, we find that social media coverage significantly accelerates corporate cooperative activities: alliance intensity increases by 35% and the annual probability of forming any alliance rises by 4.1 percentage points. This real-economy effect is concentrated in information opaque firms under severe financial constraints and larger industry shocks. Covered firms subsequently raise more debt capital and attract more sophisticated investors and monitors. Alliances formed post-initiation exhibit superior long-run operating and stock performance. Taken together, our results suggest that non-traditional information intermediaries influence the real allocation of resources by simultaneously improving capital market access and closing the visibility gap.