Corporate Use of Social Media After ESG Incidents

Despite increasing investments in corporate social responsibility (CSR) initiatives and practices, firms sometimes fail to meet public expectations and are involved in environmental, social, and governance (ESG) incidents. ESG incidents usually receive negative media coverage, and firms use corporate social media accounts to communicate with stakeholders about the incidents after the occurrences. The prevailing practical advice is that firms should avoid posting content that is irrelevant to the ESG incident (i.e., regular posts) to avoid ambiguous communication. Empirically, however, the appropriate posting strategy after an incident remains an open question. We collect data from RepRisk, a dataset that records firms’ ESG incidents and the nature of these incidents, as well as historical posts from firms’ corporate Twitter accounts. We show that in the current practice, firms do not significantly change the monthly number of social media posts after ESG incidents. Then, we test whether the number of social media posts affects firms via moderating the relationship between ESG incidents and two outcomes: reputation recovery and capital market reactions. The results suggest that the impact depends on the nature of the incident. For social incidents, more social media posts can help firms recover more quickly from the reputation damage; for governance-related incidents, more posts can help alleviate the negative impact of the incident on the firm’s value. The findings offer practical implications regarding the appropriate posting approach that corporate social media needs to adopt after different types of ESG incidents