Social Networks for Financial and Performance Reporting

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Social networks’ popularity has increased recently thus creating an online presence as well as awareness of what business is all about. According to Bullas (2013), “751 million mobile users access Facebook every month.” On the other hand, there is a dire need to enhance measurement and reporting of organizations’ performance issues to the stakeholders whose relationship with the business remains vital. The social media have completely changed the way information is relayed and the internet has taken a vital role in the manner in the dissemination of financial information. This research analyses how the financial reporting and organizations performance have improved for the past few years because of increased use of social networking.

Inescapabilty and popularity of the social network has largely created awareness and improved the relationship between the business and the stakeholders by introducing a new way in which financial information is disseminated and eventually consumed.

Companies primarily use the social media to report their performances so that the information can reach larger audience who may be interested. Information that was previously released in news releases, conference calls and presentations are revealed through twitter because of its ability to swiftly and efficiently receive and share information from a trusted source. There are live tweets of companies’ earning call enabling shareholders who are physically absent during call to receive live information. According to Scott (2013), “Of Facebook’s nearly one billion strong users, approximately 200 million are mobile only.”

On the other hand, YouTube, and Flickr may be utilized in providing videos regarding earning calls, do presentations thus engaging investors with the business financial reports as well as sharing information such as crucial business transactions that include merger and acquisition. It is worth noting that the social network has the ability to reach even remote communities thus enabling the company to operate in distant and remote places while raising awareness about them. There are many reasons justifying the use of social media in financial reporting and performance.

Social media’s ability to reach a huge audience makes it the best communication channels for businesses compared to the conventional methods that are inaccessible to some people. According to Scott (2013), “Statistical research has revealed that more than 95 per cent of Facebook users log into their account every day. The same number for Twitter is 60 per cent and for LinkedIn is 30 per cent.” Moreover, social media is less costly hence making it affordable to smaller businesses who can less expensively reach their investors.

Most journalists use twitter that provides a good platform for them to outsource various companies’ information and this may lead to raising awareness about the business performance. Using twitter may help in addressing information asymmetry that may in turn improve liquidity of smaller firm’s stock and decreasing the cost of financing. Additionally, social media has an international access and makes the message shareable and reusable thus allowing the content to be reproduced exponentially (Scott, 2013).

Social media helps in frequent communication with the shareholders especially in areas it has expertise and differentiating the company from the competitors in the industry. It further builds trust and strengthens relationship between the business and the stakeholders through creation of reputation for balanced reporting in an environment of honesty and accessibility. Investors can openly post their questions and comments and this kind of sharing may lead to an enhancement of the organization’s transparency due to reduced barrier to information accessibility (Scott, 2013).

Social media provides a platform in which an organization can well understand their shareholders through question and answer as well as through sharing pictures and visuals on the social media. Shareholders who understand an organization in details and feel that the management is honest in handling their wealth would always remain loyal to the business. Furthermore, social media may be used to build and protect brand image by addressing issues that can improve goodwill and eliminate misconceptions. A well-established and trusted social media may boost the confidence of the shareholders by providing explanation regarding various business transactions through the social network (Bullas, 2013).

Technology is very important in every industry and embracing it remains integral since it influences the investor community. Investing in social network implies that the company moves with the evolving world of business and is exploring new technologies. Investor relation department may be relieved from duplication of efforts through posting of answers to the questions asked by the investors in the social media. Providing investor contents in the social media reduces the number of calls hence prompting the company to focus on more strategic investor relations (Bullas, 2013).

Use of social media tools has largely increased the performance of many businesses across the world. Companies such as Amazon almost missed out of the hottest technology trend simply because they did not embrace the new technology especially the social media. Amazon has remained competitive in the market due to the adaptation of the social media, which empowers it to become the leader in the space (Ganeshbaskaran, 2013).

The company interacts with both her consumers and shareholders via the social media. It relays some of the innovative features of her products and services thus attracting many social media users. This provides a lot of information that may help in creating business attribute. Amazon’s nature of business exposes it to many online services included in her e-commerce activities. Shareholders are able to track the performance of the company and raise questions regarding investments. Investors are capable to monitor the growth and development of the organization from any part of the world without physically attending any meeting (Ganeshbaskaran, 2013).

Social network’s growth will even continue to rise in the near future. There are many advantages associated with the social media and unless the businesses utilize the media, they may be left out of competition. The rapid spread of information experienced in the social media remains very important in spreading the financial reports and performances to different shareholders across the world. However, social media is in the early stage of development with very weak social media policies that result into key legal and reputational risks. There may be spread of harmful rumours that may greatly affect the organizations’ performance. Interestingly, if business does not adopt new technology then it can miss out of various benefits accrued in business.

References

Bullas, Jeff. (2013). 21 Awesome Social Media Facts, Figures and Statistics for 2013. Jeffbullas.com. Retrieved from http://www.jeffbullas.com/2013/05/06/21-awesome-social-media-facts-figures-and-statistics-for-2013/

Ganeshbaskaran. (2013, April 6). Amazon.com-A unique approach to social strategy. UW TMMBA-ENTRE 528. Retrieved from http://entre528.wordpress.com/2013/04/06/amazon-com-a-unique-approach-to-social-strategy/

Scott, Mark. (2013, October 12). 5 Surprising Social Media Statistics for 2013. Socialmedia Today. Retrieved from http://socialmediatoday.com/docmarkting/1818611/five-surprising-social-media-statistics-2013