Value relevance of blog visibility

Abstract

This study empirically examines the effect of a non-traditional information source, namely a firm's blog visibility on the capital market valuation of firms. After controlling for earnings, book value of equity and other value relevant variables, such as traditional media exposure, R&D spending, and advertising expense, we find a positive association between a firm's blog visibility and its capital market valuation. In addition, we find blog visibility Grange causes trading, not vice versa. Our findings indicate that non-traditional information sources such as blogs help disseminate information and influence consumers' investment decisions by capturing their attention.