Corporate Twitter Use and Cost of Capital

This paper investigates whether firms that disclose information on social media achieve a lower cost of equity capital. Using a hand-collected dataset comprising the full universe of all firms listed on the NYSE, AMEX and NASDAQ, I show that firms that use Twitter have a lower cost of equity capital. Furthermore, firms that face the greatest information asymmetries; namely, smaller companies, companies with few analyst followings, and companies with the least institutional holdings, benefit particularly from tweeting financial information about their firm.