Do negative social media sentiments affect firm risk?

Purpose This paper aims to empirically examine the link between negative social media sentiments (SMS) and firm risk, measured by total risk. Design/methodology/approach This paper collected data from Fortune 500 companies in the USA from 2010 to 2017. The analyses used the pooled ordinary least squares, Fama–McBeth regression, fixed-effects regression and propensity score matching. Findings The results show that negative SMS increase firm risk. In addition, this paper considers the effect of corporate social responsibility (CSR) disclosures on the relationship between negative SMS and firm risk. This paper finds that the effects of negative SMS on firm risk are attenuated in firms with better CSR disclosures. Originality/value This study offers fresh perspectives for investors and managers on firm risk and the influence of social media on firm outcomes, providing valuable insights for scholars and practitioners to understand the impact of negative social media sentiments on firm risk, along with the crucial roles played by CSR in this relationship.