Fostering firm value: Unpacking the effect of circular economy disclosure via social media

Growing environmental concerns and the need to address global challenges such as climate change and resource exploitation have highlighted the relevance of the circu- lar economy (CE) and the importance for companies to communicate circular prac- tices externally. While academic literature has examined the dissemination of CE information, the effects of CE disclosure (CED) remain underexplored. This study aims to fill this gap by exploring, through signaling theory, the influence of CED via social media on firm value. The econometric analysis, based on 366 observations (an unbalanced panel of 133 internationally listed companies for the period 2019– 2021), demonstrates that CED via Twitter serves as a powerful market signal, posi- tively influencing investor perception and increasing firm value. This study enlarges the literature relating to the association between non-financial disclosure and firm value, and the effects of CED. Furthermore, it extends the debate on the use of social media as disclosure tools and broadens the scope of signaling theory.