The Risk of Silence—How the Capital Market Penalizes Social Media Passivity

We examine whether passivity on firms’ corporate Facebook pages moderates the relationship between the sentiment among social media users toward the firms and their future stock returns. We find that a longer period of posting passivity is likely to reverse a positive effect of positive sentiment on the firm’s future stock prices. For negative sentiment, we find that social media passivity results in amplified negative sentiment on the firm’s future stock prices. Moreover, we find that the longer the firm is passive, the longer it takes to overcome the negative effects of the posting passivity by resuming posting. Data Availability: Data are available from commercial databases and public sources identified in the paper. JEL Classification: D91, G40, M15, M40, M41.