Twitter as customer’s eWOM: an empirical study on their impact on firm financial performance

Jiyao Xun, Biao Guo*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

42 Citations (Scopus)


Purpose: The purpose of this paper is to investigate the relationship between customer’s electronic word-of-mouth (eWOM) regarding their direct service experiences with firms and these firms’ company value. The authors drew on the marketing-finance interface research approach to demonstrate how interactive social media adopted by individual customer relate to important firms’ financial performances. Design/methodology/approach: The authors used seven American airline companies’ customers’ tweets collected during a 52-week observation period and paired with their corresponding financial data using stock returns and volatilities. Sentiment analysis algorithm and a vector autoregressive (VAR) model quantified the strong association between customer’s eWOM and these firms’ stock returns and volatilities. Findings: The results show that customer’s eWOM regarding a firm positively associate with the firm’s stock return but negatively associate with its stock volatility; as negative valence of customer’s eWOM increases, the positive effect of eWOM on firm’s stock return decreases; the negative eWOM impacts on the stock market more profoundly compared with when both positive and negative sensitivities are considered; and eWOM’s wear-out effect is much shorter than that of traditional WOM. Originality/value: The authors address a literature gap where little is known for how customer’s eWOM, that is evaluating firm services, can ultimately impact on firms’ long-term financial performances. The authors discuss how findings from this study offer implications for marketing management as well as strategic insights for practitioners and investment analysts alike.

Original languageEnglish
Article numberedsemr.10.1108.IntR.07.2016.0223
Pages (from-to)1014-1038
Number of pages25
JournalInternet Research
Issue number5
Publication statusPublished - 2017
Externally publishedYes


  • Electronic word-of-mouth (eWOM)
  • Marketing-finance interface
  • Social networks
  • Tweets


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