Social performance and social media activity in times of pandemic: evidence from COVID-19-related Twitter activity

• DOI: https://doi.org/10.1108/CG-09-2020-0438
• Published date: 28 April 2021
• Date: 28 April 2021
• Pages: 1271-1289
• Subject Matter: Strategy,Corporate governance
• Author: Diogenis Baboukardos,Silvia Gaia,Chaoyuan She

Social performance and social media

activity in times of pandemic: evidence

from COVID-19-related Twitter activity

Diogenis Baboukardos, Silvia Gaia and Chaoyuan She

Abstract

Purpose –The purpose of this study is to examinecorporate disclosure of stakeholder-orientedactions

on Twitter in response to COVID-19 during the pandemic outbreak and to empirically investigate

whetherfirms’ social performance and their financial resilience impact on their engagement in, and

communicationof, stakeholder-orientedCOVID-19 actions.

Design/methodology/approach –This study scrapes a sample of tweets communicated by major

global listed firms betweenMarch 1, 2020 and April 30, 2020 and identifies disclosures thatmention firm

engagement in stakeholder-oriented actions in response to the COVID-19 pandemic. Cross-sectional

regression analysis is used to examine the relationship between firms’ social performance and the

number of tweets they post about stakeholder-oriented COVID-19 actions. Further, firms’ financial

resilienceis examined as a moderating factor of thisrelationship.

Findings –The results show that firms with better social performance are more likely to engage in

and, hence, communicate stakeholder-oriented actions for th e COVID-19 pandemic on Twitter.

Moreover, it is evident that firms with better social performance communicate more stakeholder-

oriented actions only when they belong to industries that h ave not been severely impacted by the

pandemic.

Originality/value –This study has two important contributions. First, this study provides

contemporary evidence of corporate disclosure of fir ms and their stakeholder-oriented actions on

Twitter in response to the COVID-19 pandemic during the init ial outbreak period. Second, it reveals

insights into what characteristics drive firms t o engage in costly corporate social responsibilit y

(CSR) activities, and promote them on social media, in a period c haracterized by high economic

uncertainty.

Keywords Twitter, COVID-19 pandemic, Social performance, Financial resilience

Paper type Research paper

1. Introduction

The COVID-19 pandemic has been labeled as the worst economic crisis since the

1930s depression and far worse than the 2008 Global Financial Crisis (International

Monetary Fund, 2020). The current health crisis and subsequent lockdown have

severely and abruptly impacted global economic activities, challenging businesses

operating in many industries around the world (De Vito and Gomez, 2020;Deloitte,

2020;Mattera et al.,2021). However, it has been argued that with the challenges

associated with COVID-19, the pandemic has offered firms new opportunities,

particularly in relation to corporate social responsibility (hereafter CSR). As the

pandemic has made firms more aware of the importance of a good balance between

financial, social and environmental performance for their long-term survival, firms may

consider engaging more with CSR (Donthu and Gustafsson, 2020;He and Harris, 2020;

Diogenis Baboukardos,

Silvia Gaia and Chaoyuan

She are all based at Essex

Business School, University

of Essex, Colchester, UK.

Received 30 September 2020

Revised 18 January 2021

10 February 2021

Accepted 17 February 2021

DOI 10.1108/CG-09-2020-0438 VOL. 21 NO. 6 2021,pp. 1271-1289, ©Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 1271

Vitolla et al.,2017). Indeed, previous studies have provi ded evidence that firms that

engage more with CSR are better pro tected from negative events, such as corporate

scandals (Christensen, 2016;Janney and Gove, 2011;Rudkin et al., 2019),

environmental scandals (Heflin and Wallace, 2017) negative press releases (Shiu and

Yang, 2017) and financial crisis (Arevalo and Aravind, 2010;Lins et al., 2017;

Fern

andez S

anchez et al., 2015). Similar findings have also been found in relation to the

COVID-19 pandemic. The studies by Albuquerque et al. (2020) and Ding et al. (2020)

showed that negative market reactions to the COVID-19 pandemic during the first

quarter of 2020 were less intense for firms with high environmental and social

performance [1], confirming that CSR is a key factor that helps firms survive in periods

of crisis.

Simultaneously, firms increasingly use social media to promote their CSR information

(Zhou et al., 2015) and engage with their stakeholders (She and Michelon, 2019). In

particular, during the current health crisis, Twitter has played an important role in the

direct and rapid dissemination of useful information about the COVID-19 pandemic

(Rosenberg et al., 2020;Rufai and Bunce, 2020). However, firms engaging with social

media do not necessarily provide information about substance. As previous studies

have shown, communicating CSR-related information on social media is not seen as an

indication of firms doing well but merely reporting well (for instance, Lee et al., 2013).

Stakeholders’ opinions ona firm are only affected when firms disclose information about

specific CSR-related actions they take, and not when they simply engage with social

media (She and Michelon, 2019). Despite the importance of CSR and social media, as

highlighted by previous studies, the extant literature has not provided any empirical

evidence of how firms use social media to promote their CSR activities undertaken as a

response to the COVID-19 pandemic. Research is necessary to understand what

characteristics drive firms to engage in costly CSR activities, and promote them on

social media, in a period characterized by high economic uncertainty.

Our study contributes to this debate by investigating the following research questions.

First, how firms’ social performance is associated with their stakeholder-oriented

actions for the COVID-19 pandemic as reported through their Twitter account, and

second, what role the financial impact of the COVID-19 pandemic plays on the

association between firms’ social performance and Twitter-reported stakeholder-

oriented actions for the COVID-19 pandemic. To investigate these research questions,

we focus our analysis on the early months of the COVID-19 outbreak (March–April

2020)becausefirms have been found to have experienced high levels of economic

uncertainty during the first phase of the pandemic (Altig et al., 2020). We examine

major global listed firms’ Twitter activity during this period. We particularly focus on

COVID-19-related tweets about the actions that firms undertook to support their

stakeholders, including employees, suppliers, customers and the wider community,

during the pandemic. We then empirically test first, whether firms’ social performance

are associated with the number of their stakeholder-oriented actions for the COVID-19

pandemic as communicated through their Twitter account, and second, whether there

is a difference in the above association between firms whose financials have been

negatively impacted by the pandemic and firms whose financials have not been

impacted.

Our findings show that during the pandemic outbreak firms that exhibit relatively high social

performance, engage more in stakeholder-oriented actions about the pandemic and they

communicate their actions through Twitter. Based on further subsample analysis, we also

show that this positive association exists only for firms that belong to industries whose

financials were not severely impacted by COVID-19, indicating that social-oriented firms

operating in negatively impacted industries have focused more on their survival rather than

their stakeholders.

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