themselves are posting content that may be relevant to your decision-making. In the current global political and social environment, the public is on perpetual high alert. So, the CEO posting about a hunting vacation with friends, or the VP who endorses a politician known to have posted disparaging racial remarks can spark a social media frenzy that can alter a company’s value within days. It doesn’t matter at that point how great the target company’s product is if the public has decided they don’t want to buy “x” from someone who thinks “y.” The other aspect of an executive’s social media profile that may prove relevant is who they are connected to. An executive’s connections may include people who are cause for consideration such as government officials or people at a competitor firm. Some connections could be more problematic: for example, the executive may be tied to individuals or groups espousing controversial views. Although the executive may not hold the same beliefs, the “guilty by association” factor comes into play. If a clever journalist could uncover the same connection, your prospective investment may be in peril. Investors have a duty to their clients to ensure that their due diligence is as thorough as possible. More information is always better than less, especially if there is a simplified way to gather and measure it using analytical tools. Unlike financial or other company records, social media can be thought of as an evolving “record” of information which can drive sentiment in one direction, or another, affecting a company’s reputation and, in turn, its financial performance. Unlike traditional media, social media doesn’t have to be accurate or even remotely grounded in reality, but that public sentiment has power. It moves money. While it is unlikely that an investment decision will ever hinge entirely on social media posts by or about an executive or the target company, using tools to efficiently distil meaningful intelligence from voluminous social data can complement and bolster traditional due diligence methods. Most importantly, it can give you a higher degree of confidence in the success of your investments. Lisa Dane is Vice President with Charles River Associates. The views expressed herein are the views and opinions of the author and do not reflect or represent the views of Charles River Associates or any of the organizations with which the author is affiliated. “Unlike financial or other company records, social media can be thought of as an evolving “record” of information which can drive sentiment in one direction, or another, affecting a company’s reputation and, in turn, its financial performance.” Finance Monthly. Business & Economy 47
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