Quality of Mandatory Social Responsibility Disclosure and Total Factor Productivity of Enterprises: Evidence from Chinese Listed Companies

Round 1

Reviewer 1 Report

Dear Authors,

Thanks for interesting research.

The main question addressed by the research is to substantiate the relevance and novelty of the research and to highlight the essential problems.

I think the topic is quite original and valuable in this area.

In relation to the subject area and in comparison with other publications, the authors provide new innovative ideas and thoughts, as well as generate discussion opportunities for future researchers.

1. Abstract. It is recommended that authors review the rules regarding the maximum number of characters to be used. In the same way, I believe that it could help to briefly include the most important results achieved in the  research.
2. Introduction and Literature review. In my opinion, the introduction is too long and it does not correctly delimit the objective of the research work. It would be convenient to make clear at this point the specific objectives of the  work and the way to reach them.
3. Authors should explain more clearly the importance and relevance of their
research and anticipate the potential benefits of this research.

I suggest justifying the choice of methods and clarifying them by showing them schematically.

4. In principle, the conclusions are appropriate, but I would suggest the authors to review them carefully and link them more closely with the results of the study.

Link the conclusions to the results in more detail.

5. There is no a discussion chapter or it's unclear where is a discussion.
6. Please add new references as some references too old and are not useful for this study

 

Good luck

Minor editing of English language required

Author Response

1. Abstract. It is recommended that authors review the rules regarding the maximum number of characters to be used. In the same way, I believe that it could help to briefly include the most important results achieved in the research.

Revision: Thank you for your suggestion, we have streamlined the abstract (149 words) and have focused on reporting the main findings.

2. 
   Introduction and Literature review. In my opinion, the introduction is too long and it does not correctly delimit the objective of the research work. It would be convenient to make clear at this point the specific objectives of the work and the way to reach them.

Revision: Thank you for your suggestion. We have made significant modifications to the introduction and made appropriate adjustments in language, content, and structure. Specifically, we have streamlined the introduction by keeping only 2/3 of the original text. in addition, we have added a description of the content related to the background of the study and introduced the problem and the relevance of the study by analysing the findings of some current studies in the field of CSR.

3. 
   Authors should explain more clearly the importance and relevance of their research and anticipate the potential benefits of this research.

I suggest justifying the choice of methods and clarifying them by showing them schematically.

Revision: Thank you for your suggestion. The previous theoretical framework in this article was too scattered. To make the theories operate within a reasonable system, we have excluded stakeholder theory and only retained information asymmetry theory, agency theory, and signaling theory. Information asymmetry theory and agency theory complement each other as commonly used theories for analyzing corporate agency conflicts. Additionally, we utilize signaling theory to analyze the relationship between external financing constraints faced by firms, as friendly signal transmission can reduce external risk assessment of firms, which is beneficial for financing. Accordingly, we have also made certain modifications to the writing and added logical deduction diagrams, which can be found on pages three and four of this paper.

Finally, based on the analysis of existing literature, we highlight the long-term synergy between TFP, firm innovation capability, and capital allocation efficiency (compared to short-term indicators such as economic performance and stock price levels) and thus only retain hypothesis H1, which suggests that mandatory CSR disclosure quality has a positive impact on a firm's TFP (see page 4).

4. In principle, the conclusions are appropriate, but I would suggest the authors to review them carefully and link them more closely with the results of the study.

Link the conclusions to the results in more detail.

Revision: Thank you for your suggestion. Based on the analysis of the research conclusions of this article, we have made certain modifications to the conclusion. For example, we emphasize the specific impact mechanisms and the role of individual channels (such as financing constraints and agency conflicts) and analyze the characteristics of these mechanisms and channels. Finally, based on this analysis, we extend the practical implications and propose corresponding policy recommendations.

 

5. There is no a discussion chapter or it's unclear where is a discussion.

Revision: Thank you for your suggestion. We have included a discussion section after presenting the empirical results. Specifically, we discuss the shared research theories and areas that require improvement in this paper (see page 21).

6. 
   Please add new references as some references too old and are not useful for this study

Revision: Thank you for your suggestion. We have replaced some outdated references and deleted the following references, such as:

1. Cooper, S.M.; Owen, D.L. Corporate social reporting and stakeholder accountability: The missing link. J. Accounting, Organizations and Society, 2007, 32, 649-667.
2. Panda, S.; D'Souza, D. E.; Blankson, C. Corporate social responsibility in emerging economies: Investigating firm behavior in the Indian context Thunderbird International Business Review, 2019, 61, 267-276.
3. Weber, W.L.; Domazlicky, B.R. Total factor productivity growth in manufacturing: a regional approach using linear programming Regional Science and Urban Economics, 1999, 29(1): 105-122.
4. Bekaert, G.; Harvey, C. R. Lundblad C. Does financial liberalization spur growth? Journal of Financial economics, 2005, 77(1): 3-55.
5. Chari, A.; Henry, P. B. Risk sharing and asset prices: evidence from a natural experiment The Journal of Finance, 2004, 59(3): 1295-1324.
6. Bhandari, A.; Javakhadze, D. Corporate social responsibility and capital allocation efficiency. J. Corp. Financ. 2017, 43, 354–377.
7. Pawliczek, A.; Skinner, A. N.; Wellman, L. A. A new take on voice:the influence of BlackRock’s ‘Dear CEO’letters J. Review of Accounting Studies, 2021, 26(3):1088-1136.
8. Rogers, J. L.; Van Buskirk, A.; Zechman, S. L. C. Disclosure tone and shareholder litigation[J]. The Accounting Review, 2011, 86(6):2155-2183.
9. Owen, D.; Gray, R.Maunders K. Researching the information content of social responsibility disclosure:a comment. J. British Accounting Review, 1987, 19(2):169-176.
10. Ang, J. S.; Cole, R. A.; Lin, J. W. Agency costs and ownership structure. J. the Journal of Finance, 2000, 55, 81-106.
11. Kaplan, S.N.; Zingales, L. Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints? J. Quarterly Journal of Economics, 1997,169-215.
12. Orlitzky, M. Does Firm Size Comfound the Relationship Between Corporate Social Performance and Firm Financial Performance? J. Ethics, 2001, 33, 167–180.
13. Chen, J. J. Determinants of capital structure of Chinese-listed companies J. Journal of Business research, 2004, 57, 1341-1351.
14. Bai, C. E.; Lu, J.; Tao Z. The multitask theory of state enterprise reform: Empirical evidence from China. J. American Economic Review, 2006, 96, 353-357.
15. Hanson, R. C.; Song, M. H. Managerial ownership, board structure, and the division of gains in divestitures. J. Journal of Corporate Finance, 2000, 6(1): 55-70.
16. Singh, M.; Davidson, III W N. Agency costs, ownership structure and corporate governance mechanisms. J. Journal of banking & finance, 2003, 27(5): 793-816.

Reviewer 2 Report

The proposed article studies an important topic.

The authors examine the processes of mandatory disclosure of information on social responsibility and the total factor productivity of enterprises in China.

Interesting research has been done. The topic is also important for the readers of the journal.

To continue reviewing, a revision should be done. I see the following issues:

1.    The Introduction should be rewritten.

2.    It should contain research aim, scientific novelty and hypothesis.

3.    Authors should particularize justification of the hypothesis.

4.    Before the “Conclusion” separate paragraph “Discussion” should be added.

5.    The language should be checked.

 

Resume. In my opinion, the article can be published after revision.

Author Response

1. The Introduction should be rewritten.

Revision: Thank you for your suggestion. We have made significant modifications to the introduction and made appropriate adjustments in language, content, and structure. Specifically, we have streamlined the introduction by keeping only 2/3 of the original text. in addition, we have added a description of the content related to the background of the study and introduced the problem and the relevance of the study by analysing the findings of some current studies in the field of CSR.

 

2. It should contain research aim, scientific novelty and hypothesis.

Revision: Thanks to your suggestion, we have streamlined the introduction by keeping only 2/3 of the original text. in addition, we have added a description of the content related to the background of the study and introduced the problem and the relevance of the study by analysing the findings of some current studies in the field of CSR.

3. Authors should particularize justification of the hypothesis.

Revision: Thank you for your suggestion. The previous theoretical framework in this article was too scattered. To make the theories operate within a reasonable system, we have excluded stakeholder theory and only retained information asymmetry theory, agency theory, and signaling theory. Information asymmetry theory and agency theory complement each other as commonly used theories for analyzing corporate agency conflicts. Additionally, we utilize signaling theory to analyze the relationship between external financing constraints faced by firms, as friendly signal transmission can reduce external risk assessment of firms, which is beneficial for financing. Accordingly, we have also made certain modifications to the writing and added logical deduction diagrams, which can be found on pages three and four of this paper.

Finally, based on the analysis of existing literature, we highlight the long-term synergy between TFP, firm innovation capability, and capital allocation efficiency (compared to short-term indicators such as economic performance and stock price levels) and thus only retain hypothesis H1, which suggests that mandatory CSR disclosure quality has a positive impact on a firm's TFP (see page 4).

 

4. Before the “Conclusion” separate paragraph “Discussion” should be added.

Revision: Thank you for your suggestion. We have included a discussion section after presenting the empirical results. Specifically, we discuss the shared research theories and areas that require improvement in this paper (see page 21).

5. The language should be checked.

Revision: Thank you for your suggestion. We have checked and revised the language, especially the writing section of the introduction, theoretical analysis, and conclusion, which has been significantly revised

Reviewer 3 Report

The paper entitled “Quality of Mandatory Social Responsibility Disclosure and Total Factor Productivity of Enterprises: Evidence from Chinese Listed Companies” develops an interesting idea and is relatively clear. However, I think it can be further developed. I will try to offer some constructive comments below. Please note that I do not feel qualified to judge about the English language and style.

1. Introduction – I would prefer a shorter introduction. Some material could be transferred to a Background section that I think would be interesting to have in this paper. Despite such shortening, the introduction should be informative (as it is in this version), given that we need to understand at least “what”, “why”, “how” and “so what”.

2. Structure: The structure of your paper can be improved. One way of doing it is: (i) Introduction; (ii) Background; (iii) Theoretical literature review/ Theoretical framework; (iv) Empirical literature review and hypotheses development; (v) Research design; (vi) Empirical results and discussion; and (vii) Summary and conclusion. Note that this is only one possible structure.

3. Background: I think the paper could be strengthened by the addition of a background section in which the issues total factor productivity and disclosure quality could be better expounded.

4. Theoretical literature review/ Theoretical framework: I would like to see the theoretical framework further developed and explained in an autonomous section. In p. 5 the authors mention using “principal-agent theory and signalling theory” and in p. 16 the refer to “information asymmetry theory, agency cost theory, signalling theory and stakeholder theory”. I suggest that the authors select a framework (that can result from a combination of theories) and expound it cogently.

5. Empirical literature review and hypotheses: The authors could present the empirical literature and then present the hypotheses. For each hypothesis, first outline the theoretical link between the variables. Second, outline the prior empirical findings. Third, present any contextual insights and finally, set up your hypotheses. I should note that I am not a fan of having competing hypotheses. I would prefer that the authors, based on a theoretical framework, develop one hypothesis, and in the discussion present alternative ways of interpreting the findings.

6. Empirical results: For each hypothesis: first state what the findings are; second, indicate whether the relevant hypothesis is supported or not; third, compare and contrast the findings with those of prior theoretical and empirical studies; fourth, highlight any implications of your study.

7. Conclusion: The conclusion section could be further developed. I also think more could have been made of the discussion on the implications for theorising about the topic. The conclusion needs to go beyond the immediate results and actually explore the ramifications of the research findings for knowledge production and practice in the area. Some limitations and suggestions for further research should be mentioned.

8. An additional note

I think the authors should problematize the concept of TFP and acknowledge its limitations (see, for example, Keen et al., 2019).

Otherwise, I wish the author(s) well with this research.

 

(Possibly) useful references:

Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of management, 37(1), 39-67.

Friske, W., Hoelscher, S. A., & Nikolov, A. N. (2022). The impact of voluntary sustainability reporting on firm value: Insights from signaling theory. Journal of the Academy of Marketing Science, 1-21.

Keen, S., Ayres, R. U., & Standish, R. (2019). A Note on the Role of Energy in Production. Ecological economics, 157, 40-46.

López-Santamaría, M., Amaya, N., Hinestroza, M. P. G., & Cuero, Y. A. (2021). Sustainability disclosure practices as seen through the lens of the signaling theory: A study of companies listed on the Colombian Stock Exchange. Journal of Cleaner Production, 317, 128416.

Stuart, A. C., Fuller, S. H., Heron, N. M., & Riley, T. J. (2023). Defining CSR disclosure quality: a review and synthesis of the accounting literature. Journal of Accounting Literature, 45(1), 1-47.

Author Response

1. Introduction – I would prefer a shorter introduction. Some material could be transferred to a Background section that I think would be interesting to have in this paper. Despite such shortening, the introduction should be informative (as it is in this version), given that we need to understand at least “what”, “why”, “how” and “so what”.

Revision: Thanks to your suggestion, we have streamlined the introduction by keeping only 2/3 of the original text. in addition, we have added a description of the content related to the background of the study and introduced the problem and the relevance of the study by analysing the findings of some current studies in the field of CSR.

2. Structure: The structure of your paper can be improved. One way of doing it is: (i) Introduction; (ii) Background; (iii) Theoretical literature review/ Theoretical framework; (iv) Empirical literature review and hypotheses development; (v) Research design; (vi) Empirical results and discussion; and (vii) Summary and conclusion. Note that this is only one possible structure.

Revision: Thank you for your suggestion. We have appropriately added some research background content in the introduction section and merged the (i) introduction and (ii) research background sections together. In terms of the article's exposition, we still follow the writing order you recommended, starting from the introduction to the research background. Additionally, we have included a discussion section after presenting the empirical results. Specifically, we discuss the shared research theories and areas that require improvement in this paper (see page 21).

3. Background: I think the paper could be strengthened by the addition of a background section in which the issues total factor productivity and disclosure quality could be better expounded.

Revision: Thank you for your suggestion. As a result, we have added some discussions on the existing literature regarding the impact of CSR information disclosure on the economic consequences of firms in the research background section and used it to introduce the problem under study in this paper. In particular, we discuss the impact of policy-induced improvements in information disclosure quality on firm performance, innovation capability, investment efficiency, and their underlying mechanisms. We also introduce related theories and speculate on the possible effects of CSR information disclosure quality on TFP.

4. Theoretical literature review/ Theoretical framework: I would like to see the theoretical framework further developed and explained in an autonomous section. In p. 5 the authors mention using “principal-agent theory and signalling theory” and in p. 16 the refer to “information asymmetry theory, agency cost theory, signalling theory and stakeholder theory”. I suggest that the authors select a framework (that can result from a combination of theories) and expound it cogently.

Revision: Thank you for your suggestion. As you mentioned, the previous theoretical framework in this article was too scattered. To make the theories operate within a reasonable system, we have excluded stakeholder theory and only retained information asymmetry theory, agency theory, and signaling theory. Information asymmetry theory and agency theory complement each other as commonly used theories for analyzing corporate agency conflicts. Additionally, we utilize signaling theory to analyze the relationship between external financing constraints faced by firms, as friendly signal transmission can reduce external risk assessment of firms, which is beneficial for financing. Accordingly, we have also made certain modifications to the writing and added logical deduction diagrams, which can be found on pages three and four of this paper.

5. Empirical literature review and hypotheses: The authors could present the empirical literature and then present the hypotheses. For each hypothesis, first outline the theoretical link between the variables. Second, outline the prior empirical findings. Third, present any contextual insights and finally, set up your hypotheses. I should note that I am not a fan of having competing hypotheses. I would prefer that the authors, based on a theoretical framework, develop one hypothesis, and in the discussion present alternative ways of interpreting the findings.

Revision: Thank you for your suggestion. As previously mentioned, we have adjusted the theoretical analysis section of the article and based our research hypotheses on a theoretical framework consisting of information asymmetry theory, agency theory, and signaling theory. Additionally, based on the analysis of existing literature, we highlight the long-term synergy between TFP, firm innovation capability, and capital allocation efficiency (compared to short-term indicators such as economic performance and stock price levels) and thus only retain hypothesis H1, which suggests that mandatory CSR disclosure quality has a positive impact on a firm's TFP (see page 4).

6. Empirical results: For each hypothesis: first state what the findings are; second, indicate whether the relevant hypothesis is supported or not; third, compare and contrast the findings with those of prior theoretical and empirical studies; fourth, highlight any implications of your study.

Revision: Thank you for your suggestion. We have made modifications to the exposition of the empirical results in the paper. Specifically, we have correspondingly explained the empirical results and hypotheses mentioned in the theoretical analysis section, including the mechanism test section, heterogeneity analysis section, and further analysis section. Additionally, we briefly explain the research implications of key empirical results in the discussion section (see page 21).

 

7. Conclusion: The conclusion section could be further developed. I also think more could have been made of the discussion on the implications for theorising about the topic. The conclusion needs to go beyond the immediate results and actually explore the ramifications of the research findings for knowledge production and practice in the area. Some limitations and suggestions for further research should be mentioned.

Revision: Thank you for your suggestion. Based on the analysis of the research conclusions of this article, we have made certain modifications to the conclusion. For example, we emphasize the specific impact mechanisms and the role of individual channels (such as financing constraints and agency conflicts) and analyze the characteristics of these mechanisms and channels. Finally, based on this analysis, we extend the practical implications and propose corresponding policy recommendations.

8. An additional note

I think the authors should problematize the concept of TFP and acknowledge its limitations (see, for example, Keen et al., 2019).

Revision: Thank you for your suggestion. The TFP selected in this paper refers to the studies by Olley and Pakes (1996), Levinsohn and Petrin (2003), and Ackerberg et al. (2015). However, the above methods of calculating TFP have certain limitations and are unable to fully measure the development quality of firms. Therefore, in the discussion section, we briefly explore the limitations of using TFP to measure both the production efficiency and economic development quality of firms. We hope that in future research, we can develop more suitable indicators for measuring firm production efficiency.

Round 2

Reviewer 1 Report

 Accept in present form