Machine Tweeting

Abstract

This study investigates the growing phenomenon of social bot engagement with corporate disclosures. Using hand-collected data on user interactions with corporate earnings announcement (EA) tweets, I find that bot dissemination generates positive short-term returns around EA tweets, which subsequently reverse. Additional evidence suggests that the reversal likely arises because bots amplify overreaction to firms’ optimistic framing. Cross-sectional analyses show that the effect is stronger for firms with greater retail investor presence and for those with lower information transparency. Transaction-level trade evidence further indicates that retail investors are the primary drivers of the initial overreaction. A horse-race analysis against human dissemination shows that reversals occur only under bot engagement, as human interactions do not exhibit similar patterns but instead counterbalance firms’ optimistic framing.