Small Business Economics

, Volume 53, Issue 3, pp 631–645 | Cite as

Investigating social media as a firm’s signaling strategy through an IPO

  • Atthaphon Mumi
  • Michael Obal
  • Yi YangEmail author


Initial public offerings (IPOs) are a crucial step for entrepreneurial firms. Despite the growing popularity of social media among various audiences, including potential investors, limited studies have investigated how firms can utilize social media to attract financial capital during the IPO process. We utilize the signaling theory and the electronic word of mouth (eWOM) literature to shed light on this issue. Our study, based on Twitter and SDC data of 367 firms that went public in the USA from 2014 to 2015, provides evidence in support of a positive relationship between social media use by a firm and its IPO value. Furthermore, the effectiveness of a firm’s tweets is mediated by public responses to its tweets, and such effectiveness is found to be stronger for B2C firms and firms with more traditional media coverage.


Social media Initial public offering Signaling theory Word of mouth Twitter B2C 

JEL classifications

G14 L26 M13 M30 

Supplementary material

11187_2018_66_MOESM1_ESM.docx (22 kb)
ESM 1 (DOCX 21.8 kb)
11187_2018_66_MOESM2_ESM.docx (17 kb)
ESM 2 (DOCX 20 kb)


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Mahasarakham Business SchoolMahasarakham UniversityMaha SarakhamThailand
  2. 2.Department of Marketing Entrepreneurship & InnovationUniversity of Massachusetts LowellLowellUSA

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