Financing, Small and Medium Entities and Social Media

Abstract

This article examines the relationship between corporate social media communication and financing for Small and Medium Entities (SMEs). First, it provides a critical analysis of prior literature on the use of corporate social media and the potential benefit and costs for SMEs. It then discusses current evidence on the relationship between corporate social media, the cost of equity and the cost of debt. Next, it provides empirical evidence on the impact of corporate social media use on the cost of debt for a set of small and medium firms listed on the Alternative Investment Market London. Lastly, it proposes future research avenues about the association between corporate social media communication and corporate financing. This study provides important theoretical and empirical evidence on how social media are revolutionizing corporate disclosure and the important implications for SMEs and their financing.