1.

0 OVERVIEW

The topic and the journal’s article is exploring the relationship between corporate
responsibility and firm performance from a social media perspective. This journal’s article is
by Rat Qing Cao, Dara G. Schniederjans, Vicky Ching Gu and Mars J. Schniederjans. The
purpose of this journal’s article is to examine the relationship between corporate
responsibility framing from the social media perspective firm’s performance as defined by
abnormal-return and idiosyncratic risk. The hypotheses are developed through agenda-setting
theory and stakeholder and shareholder viewpoints. The research model is tested using
sentiment analysis from a collection of social media from several industries.

2.0 ISSUES

2.1 Abnormal Return

Framing is a concept which is commonly used to understand the media effect and it is
regarded as the extension of agenda-setting theory. This theory talk about how media diverts
the attention of audience from importance of an issue to what it wants to project and it is used
to know media effects [ CITATION Shr18 \l 17417 ] . Based on this journal stated that it study to
examines the associations and interaction between corporate responsibility social media
framing on a firm’s abnormal return and idiosyncratic risk. Abnormal return can be describes
as the unusual profits generated by given securities or portfolios over a specific period. The
performance is different from the expected or anticipated, rate of return for the investment
[ CITATION Ada19 \l 17417 ]. Abnormal returns are essential in determining a security’s or
portfolio’s risk adjusted performance when compare to the overall market or a benchmark
index. Regarding to that, a firm’s financial health are based on the financial performance
measures. Based on this journal, many event can impact an abnormal return such as company
earnings, announcements, lawsuits, mergers and acquisitions as they contribute to the stock
price that have not been priced in the market. Moreover, there are three corporate
responsibility social media categories which are economic, social and environmental framing.

2.2 Idiosyncratic risk

Idiosyncratic-risk is the risk of a particular asset such as a stock because of firm-specific

characteristics that has little correlation with overall market risk. For example, company
management’s decisions on operations or investment policies are common idiosyncratic risks
specific to a company and its stock. Economic social media framing will likely have an
immediate impact on shareholder response. This response can directly alter the price of stock,
thereby impacting idiosyncratic-risk without actually impacting stakeholder response.
However, positive economic viability is fundamental to not only shareholders but also other
stakeholders, including employees, suppliers and customers who are likely to be directly
impacted by a firm’s economic performance. Thus, the hypothesis for idiosyncratic risk are
corporate responsibility sentiment score for each dimension and the total number of corporate
responsibility mentions for each dimension.

3.0

With social media, however, short-term (one-day) and long-term (three-day) impacts differ
from traditional media (i.e. newspapers). This is because the economic-framing of social
media is likely to have an immediate impact on abnormal-return through positive shareholder
response. The impact on other stakeholder response is slightly more questionable. Although
social media can be accessed by both secondary and primary stakeholders, typically social
media requires either a subscription or a genuine interest from the reader. This indicates that
primary stakeholders are likely to have greater access to a firm’s social media.