Social Media Surveillance and the Cost of Equity: Evidence from the Social Media Privacy Laws
Prof. Nan CHEN
Assistant Professor, School of Hotel and Tourism Management
The Hong Kong Polytechnic University
Date: 29 April 2026 (Wednesday)
Time: 10:00-11:30
Venue: E22-G008
Host: Prof. Rubin HAO, Assistant Professor in Accounting
Abstract
Firms increasingly rely on social media in employee screening and monitoring, suggesting that these practices may play an important role in managing humancapital-related firm risks. Exploiting the staggered enactment of state-level social media privacy laws (SMPLs) in a difference-in-differences design, we find consistent evidence that restrictions on these practices increase firms’ risks, as the cost of equity rises by 43.4 basis points. The effect is more pronounced among firms where employee-related risks and labor adjustment frictions are likely more salient, including those with higher growth, greater reliance on skilled labor, greater exposure to talent retention risk, and higher vulnerability to cybersecurity risks. Additional analyses further support these mechanisms, as SMPL enactment is associated with higher systematic return volatility, weaker accounting performance, and more data leakage incidents. Overall, our findings highlight the role of social media surveillance as a risk-management tool in employee selection and oversight.
Speaker
Wilbur Chen is Assistant Professor of Accounting at the Hong Kong University of Science and Technology and Co-Director of the Center for Securities Analysis with Financial Technology. He earned his PhD from Harvard University and studies how digital technologies and artificial intelligence are transforming firms and capital markets. His research examines how these technological changes affect corporate decision-making, disclosure, financial intermediation, and market outcomes.
All are welcome!
