by
Dr. Liva LaMontagne , Editorial Research Manager
In May 2015, Professor W. Brooke Elliott and Ph.D. student Stephanie M. Grant from the University of Illinois at Urbana-Champaign and Professor Frank D. Hodge from the University of Washington released the results of an experiment they conducted on 194 business students.
The students participated in an online experiment where they were instructed to assume they own a portfolio of stocks. As part of the students' annual review of their portfolio holdings, they were considering investing in a new company.
Participants first reviewed background information and images of the company’s logo and its CEO. Next, participants viewed a series of press releases in which the firm met or failed to meet analysts’ earnings expectations, and then rated their willingness to invest.
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The researchers manipulated message channels by providing hyperlinks to press releases from either the firm’s Investor Relations website or Twitter. In the website condition, participants had to click a link from the webpage to view a popup box containing each press release. In the Twitter condition, participants received an initial tweet with a link to a popup box containing the first press release.
The researchers also manipulated message sources by sending participants press releases from an Investor Relations Twitter account or a CEO Twitter account.
The researchers found that after negative financial news, investors following a CEO on Twitter are more willing to invest than investors following a firm’s Investor Relations on Twitter or getting the news from the firm’s website.
According to Professor Elliott, this happens because social media creates the impression of a personal relationship between CEOs and investors like never before.
"With every tweet comes a photo of the CEO, making these frequent updates feel like a personal connection with the CEO," Elliott said, adding that, "Investors quickly develop an enduring relational trust in the CEO previously only possible in face-to-face, long-term relationships."
For publicly held companies, public relations with investors are clearly important. Privately held companies can benefit from CEO Twitter use, too, by engaging with their employees and clients. In fact, one of the most active CEOs on Twitter is American Family Insurance’s Jack Salzwedel, representing a privately held company.
He shared the following two insights on the benefits and challenges of using Twitter.
Make more personal connections
"Social media is more about finding your voice as a leader and making online connections with people you may not normally see or interact with in person," Salzwedel said.
He sees Twitter as a way you can share your vision, but also about who you are as a person — charitable work, favorite sports teams, even friends and family events.
He advised leaders to use social media to break down barriers and talk to more people inside their companies, adding that it will give people outside of the brand a better picture of company culture and values.
"By being out there daily, leaders are more approachable, relatable and transparent," he said.
Salzwedel also uses social media to save time — by having news, blogs and other information for his day all in one place.
"It’s also a good way to get the pulse of your company by listening to what customers are saying but also what employees are talking about," he said.
How to start using Twitter as a CEO
"Don’t be afraid to ask for some help from your communications or marketing teams," Salzwedel said, adding that it’s important to make sure they have final say in what they tweet or post, because it will help them be more authentic.
"Twitter is another way to help me find my voice, and that’s how I hope other leaders approach it," Salzwedel said. He stressed that leaders need social media communication skills to help identify emerging leaders and tomorrow’s talent.
"Use [Twitter] to share your ideas and connect with people, especially at your company," he advised, adding that Twitter has helped him develop deeper relationships with his employees, agents and customers.
"Our study suggests an easy way to get CEOs up and running on Twitter," Elliott said.
She suggested CEOs can start by simply tweeting links to press releases and following up with more tweets quoting highlights from the press release. This strategy only takes a few minutes every quarter and minimizes legal issues since the firm has already approved the tweeted information.
"The potential bonus is significant — investors could develop enduring trust in the CEO, which could minimize negative responses to bad news," Elliott said.
Related Resources
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Professor Elliott's homepage (College of Business at University of Illinois at Urbana-Champaign)
American Family InsuranceFortune 500 CEOs on Twitter (from CEO.com)
Social Media and the CEO: Does Twitter know more than Henry Ford? (From the MarketingSherpa blog)
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