Social media Q&A text semantic similarity and corporate fraud: evidence from the Shanghai Stock Exchange E-interaction platform in China

We develop a social media Q&A text semantic similarity (QATSS) measure to distinguish the quality of management responses on the Shanghai Stock Exchange E-interaction (SSEEI) platform, and examine its role in identifying corporate fraud. We find robust evidence that firms with higher QATSS are less likely to commit corporate fraud. Further analyses show that the negative relationship between QATSS and fraud is more pronounced in less visible firms, non-state-owned firms, and firms with lower audit quality. Overall, our results suggest that the semantic similarity between management responses and investors’ questions on social media is a value-relevant signal for fraud detection.