Social Media Disclosures on Facebook vs. X: The Differential Role of Firm Characteristics and Corporate Governance Mechanisms

This study examines the impact of firm characteristics and governance mechanisms (board of directors and ownership structure) on social media disclosures through Facebook and X. In addition, this study investigates whether social media disclosures help reduce information asymmetry. Using latent Dirichlet allocation (LDA), a text-mining technique that uncovers thematic patterns in unstructured corporate disclosures, we find that Pakistani firms disclose 10 topics on X (formerly Twitter) and 7 on Facebook. Our regression results show that firm size, board meeting frequency, and managerial ownership promote corporate disclosure through Facebook, whereas family board members and foreign ownership negatively affect it. In contrast, board size, board gender diversity, family board members, and managerial ownership positively affect corporate disclosure through X. Our findings suggest that different firms (in terms of their characteristics and governance structures) strategically use different social media platforms based on the platform design and nature, targeted audience and the type of information they want to disclose. In addition, we find that greater disclosure through Facebook may help reduce information asymmetry. We conduct several additional analyses to explore disclosure quality, topic-specific effects, and the roles of family firms and first-time adoption. This research contributes to the AIS literature by showing how emerging digital communication platforms interact with firm characteristics and governance mechanisms to shape corporate disclosure practices, platform-specific communication strategies, and the broader information environment.