The use of social media to detect corporate fraud: A case study approach

Social media is a rapid and dynamic medium of communication that forms a crucial component of the modern business toolkit. It can be used to detect corporate fraud by tapping into collective user wisdom, also known as the wisdom of crowds. This article highlights both the potential and limitations of social media in detecting corporate fraud by examining information from traditional media and social media for a recent corporate fraud case (i.e., Empowered Products Inc.). Using text analysis of information posted on traditional media compared to social media, this article illustrates how social media provides an increased level of relevant information in a faster manner. By using wisdom of crowds in this way, social media platforms such as Twitter can improve organizational knowledge quality. We identify methods for managers to utilize social media to improve their organizational knowledge management.