The unintended consequence of social media criticisms: an earnings management perspective

This paper investigates the impact of social media criticisms on financial reporting quality. Analyzing data from leading Internet stock message board in China, we demonstrate that postings boards could promote earnings management, i.e. reducing transparency. finding is further enhanced by employing instrumental variable approach and difference-in-differences explained cognitive evaluation theory. Additional analysis suggests positive relation between management cannot be attributed to a deterioration operating performance or internal governance more pronounced senior users.