Do firms opportunistically manipulate their responses to fake news on social media? Evidence from a natural experiment

Abstract

Using a unique setting specific to China’s social media ecology of corporate responses to fake news on investor-interactive platforms (IIPs), this study provides novel evidence that firms systematically leverage strategically timed responses to fake news to serve self-interested objectives. We find that during information-sensitive periods, firms delay clarification of fake good news while accelerating responses to fake bad news, a pattern consistent with opportunistic timing. These results offer policy insights for emerging and developed markets with similar interactive platforms, underscoring regulators’ need to prevent potential opportunistic manipulation by firms in the face of proliferating social media fake news.