Corporate Social Responsibility and Investor Relations Management: Evidence from China

Response to Reviewer 1 Comments

1. Summary

Thank you very much for taking the time to review this manuscript. Your valuable comments are very objective and correct. We have tried our best to revise the manuscript according to your suggestion. According to your opinions, the instructions are revised as follows. In order to facilitate your review, the modified part will be commented in red font.  All page numbers refer to the revised manuscript file with tracked changes. Please find the detailed responses below and the corresponding revisions/corrections highlighted/in track changes in the re-submitted files.

2. Questions for General Evaluation

Reviewer’s Evaluation

Response and Revisions

Does the introduction provide sufficient background and include all relevant references?

Can be improved

corresponding response in the point-by-point response letter

Are all the cited references relevant to the research?

Can be improved

corresponding response in the point-by-point response letter

Is the research design appropriate?

Can be improved

corresponding response in the point-by-point response letter

Are the methods adequately described?

Can be improved

corresponding response in the point-by-point response letter

Are the results clearly presented?

Can be improved

corresponding response in the point-by-point response letter

Are the conclusions supported by the results?

Can be improved

corresponding response in the point-by-point response letter

3. Point-by-point response to Comments and Suggestions for Authors

Comments 1: A more comprehensive discussion of the relationship between IRM and CSR should be included in the introduction, and in particular how the risk of CSR "hypocrisy" can be mitigated through IRM. Therefore, in introducing the history and development of CSR, it is useful to delve further into the research related to IRM and how these studies support the research framework and assumptions of this paper.

Response 1: Thank you for pointing this out. We agree with this comment. Therefore, We have added relevant literature and content in the introduction, the specific content is as follows[page 2, in line 71]:

“As we all know, information asymmetry is a common problem in the capital market. By strengthening interactive communication, enterprises can reduce information asymmetry between investors and enable investors to make investment decisions based on more comprehensive information, thus protecting legitimate rights and interests of investors. Furthermore, effective investor relations management (IRM) is the basic manifestation and external extension of good corporate governance. IRM encompasses the communication and engagement between enterprises and investors, with the objective of cultivating transparent and steadfast investor relationships, attracting investment, and augmenting corporate value and reputation. The proactive discharge of social responsibilities by enterprises can bolster investors' confidence in the businesses and contribute to the stabilization of investor relations. Existing studies have found that through interactive communication with investors, enterprises can establish a closer investor relationship network, enhance investors' sense of identity and belonging to enterprises (Lee and Zhong, 2022), reduce the volatility and uncertainty of the stock market, and provide investors with a more stable and reliable investment environment (Zhang and Wang, 2024). Previous view believed that CSR was a way to cover up bad behaviors of enterprises, which would harm the interests of investors. As a result, the more companies focus on CSR, the worse the investor market may react (Christensenet et al., 2020; Hafenbrädl and Waeger,2021). Therefore, while performing CSR, enterprises should do better in the dissemination of true information and IRM. From this perspective, if appropriate and necessary investor relations management (IRM) is not implemented, companies that seriously implement CSR and promote sustainable development may be mistaken as "hypocritical" enterprises, which is not conducive to long-term sustainable development of enterprises. Moreover, the fulfillment of corporate social responsibility and the reinforcement of investor relations management jointly promote the sustainable development of enterprises. Enterprises enhance their competitiveness and sustainable development ability by fulfilling social responsibility, while investors realize their investment objectives and value pursuit by paying attention to and supporting enterprises with social responsibility. This virtuous circle helps to promote sustainable development of the whole society.”

Comments 2:In line 84, although three possible contributions of this paper are mentioned, it should be more clearly pointed out in the introduction how these contributions fill in the gaps of existing research, or what impact they have on existing theory and practice.

Response 2: Thank you for your constructive feedback. we explain the marginal contribution of this paper in more detail, as follows[page 3, in line 95]:

“This article mainly has three possible marginal contributions. First of all, most of the previous literature start from the listed companies themselves to fulfill their social responsibilities, paying attention to the "true kindness" or "hypocrisy" motivation of listed companies to live up to their social obligations (Wagner et al., 2009; Fassin and Buelens, 2011; Fan et al., 2014), seldom focusing on investors' views on their performances. This paper innovatively researches the process of enterprises' social responsibilities from the perspective of investor relations management. How to prevent being misunderstood by investors as a "hypocrisy" behavior complements the relevant research on corporate social responsibility. Findings suggest that companies better at CSR can protect themselves from being misunderstood by strengthening their IRM. Secondly, previous studies on investor relationship management focused more on the specific practices of investor relationship management, and less on investor relationship management strategies under the scenario that enterprises actively fulfill their social responsibilities. This study complements relevant studies on investor relationship management. The active and effective internal management of listed companies promotes the positive transmission mechanism of corporate social responsibility. The conclusion provides strategic reference for listed companies to strengthen their internal management while fulfilling their social responsibilities. Finally, there are many controversies about the economic consequences of CSR performance in existing studies. For example, whether CSR performance reduces or increases the risk of stock price crash. The results of this paper support the former conclusion and provide new evidence from the perspective of investor relations management.“

Comments 3: In the description of line 208 of the paper, the use of non-financial company data in China's "A" share market is mentioned, but the specific criteria and exclusion criteria for sample selection are not clearly indicated. No good reasons have been provided to explain the selection of the sample from 2011 to 2020? Is there data from other years or industries that can provide a fuller perspective? It is recommended to specify the specific conditions in the sample selection process to enhance the logic and readability of the chapter.

Response 3:We are grateful for your kind comments. We added the reasons for the selection of 3.1.Data and sample. The details are as follows[page 7, in line 264]:

“ First of all, considering the big difference between the financial data of financial companies and that of non-financial companies，we retrieved non-financial companies data from China’s “A”stock market. Secondly, the main dependent variable of this study is CSR, which was obtained from Hexun Network(www.hexun.com), and announced in 2010. We use the Investor Relations Interaction Index(IRII) to measure the level of IRM, obtained from the Nankai University Investor Relations Interaction Index Database, currently updated to 2019. To alleviate the impact of endogenous issues, the explanatory variable is uniformly t+1 periods. Based on the availability of data, we select 2011 to 2020 as the actual sample period.“

Comments 4: For the content in section 3.2.3, first there was an error in the sequence number at the header. Second, multiple control variables are listed without explaining why they were chosen and how they affect IRM levels. It is suggested that the selection of each control variable should be supported by theoretical or empirical research to enhance the persuasiveness of the paper.

Response 4:Thank you very much for your comments. We have corrected the serial number error of title 3.2.3 with red font in the revised draft[page 8, in line 291]. The selection of control variables is supported by relevant literature, which are as follows[page 8, in line 292]:

“ We incorporate various control variables at the firm level, including corporation scale(lnsize), corporation fixed number of year(Age), asset-liability ratio(Lev), operating cash flow(Cashflow), return on assets(ROA), book-to-market(MB), stock turnover rate(Turnover), shares of controlling stockholders(TOP1), the top ten majority shareholding ratio(TOP10), separation of ownership and control(Sep), executive part-time(Power), number of professional committees(Committee). Large-scale enterprises typically attract more investors, necessitating a more sophisticated and structured approach to investor relations management (Zhou & Gan, 2022). The age of a business serves as a reflection of its historical trajectory and market reputation. Established enterprises tend to cultivate a more enduring brand image and reputation, fostering increased investor confidence (Gillan, 2021). The asset-liability ratio (Lev), operating cash flow (Cashflow), and return on assets (ROA) are utilized to mitigate the impact of an enterprise's financial health on IRM (Gao et al., 2022). Similarly, the book-to-market ratio (MB) and turnover ratio are leveraged to regulate the influence of capital market performance on stock trading outcomes (Huang et al., 2022).   Factors related to corporate governance, including the shareholding ratio of controlling shareholders (TOP1), the shareholding ratio of the top ten shareholders (TOP10), the separation of ownership and control (Sep), the dual roles of senior executives (Power), and the composition of professional committees (Committee), are employed to control the effects of corporate governance on IRM (Zhou & Gan, 2022).“

Comments 5: In the section "4.2. Robustness test", high dimensional fixed effects and instrumental variable estimation are mentioned, but no details are given on the basis on which these methods are chosen and on their role in research. It is recommended to increase discussion of the reasons for the choice of these methods and how they can help improve the reliability of the findings.

Response 5:Thank you for your constructive comments.We have added the rationale for selecting high dimensional fixed effects and instrumental variable estimation to the section 4.2. Robustness test.

[page 11, in line 353]:“High dimensional fixed effects can reflect more subtle differences in variables, making the correlation of variables more precise. Although various control variables have been introduced into the baseline regression, there may still be some unobservable factors that affect both corporate social responsibility scores and investor management levels. Therefore, in order to further alleviate the impact of the missing variable problem on the empirical results of this paper, this paper uses the high-dimensional fixed effect method to conduct robustness test.“

[page 12, in line 371]“The main function of instrumental variables is to solve the endogenous problem in the model. When the explanatory variables in the model are related to the error term, traditional regression analysis may not be able to accurately estimate the causal relationship between the variables. Instrumental variables help identify and estimate true causality by introducing exogenous variables that are related to explanatory variables but not to the error term. Considering that corporate social responsibility and investor relations management may have the endogenous problem of mutual causation, this paper introduces the instrumental variable method for further analysis.“

Response to Reviewer 2 Comments

1. Summary

Thank you very much for taking the time to review this manuscript. Your valuable comments are very objective and correct. We have tried our best to revise the manuscript according to your suggestion. According to your opinions, the instructions are revised as follows. In order to facilitate your review, the modified part will be commented in red font.  All page numbers refer to the revised manuscript file with tracked changes. Please find the detailed responses below and the corresponding revisions/corrections highlighted/in track changes in the re-submitted files.

2. Questions for General Evaluation

Reviewer’s Evaluation

Response and Revisions

Does the introduction provide sufficient background and include all relevant references?

Can be improved

corresponding response in the point-by-point response letter

Are all the cited references relevant to the research?

Must be improved

corresponding response in the point-by-point response letter

Is the research design appropriate?

Must be improved

corresponding response in the point-by-point response letter

Are the methods adequately described?

Can be improved

corresponding response in the point-by-point response letter

Are the results clearly presented?

Can be improved

corresponding response in the point-by-point response letter

Are the conclusions supported by the results?

Can be improved

corresponding response in the point-by-point response letter

3. Point-by-point response to Comments and Suggestions for Authors

Comments 1: (Content Description and Contextualisation)The content is not sufficiently described and lacks proper contextualisation concerning previous and present theoretical backgrounds and empirical research. For instance, the introduction does not adequately link the research to existing theories of CSR and IRM. A more comprehensive literature review and stronger integration of past research are required to contextualise the study effectively.

Response 1: Thank you for pointing this out. We agree with this comment. Therefore, We have added relevant literature and content in the introduction, the specific content is as follows[page 2, in line 71]:

“As we all know, information asymmetry is a common problem in the capital market. By strengthening interactive communication, enterprises can reduce information asymmetry between investors and enable investors to make investment decisions based on more comprehensive information, thus protecting legitimate rights and interests of investors. Furthermore, effective investor relations management (IRM) is the basic manifestation and external extension of good corporate governance. IRM encompasses the communication and engagement between enterprises and investors, with the objective of cultivating transparent and steadfast investor relationships, attracting investment, and augmenting corporate value and reputation. The proactive discharge of social responsibilities by enterprises can bolster investors' confidence in the businesses and contribute to the stabilization of investor relations. Existing studies have found that through interactive communication with investors, enterprises can establish a closer investor relationship network, enhance investors' sense of identity and belonging to enterprises (Lee and Zhong, 2022), reduce the volatility and uncertainty of the stock market, and provide investors with a more stable and reliable investment environment (Zhang and Wang, 2024). Previous view believed that CSR was a way to cover up bad behaviors of enterprises, which would harm the interests of investors. As a result, the more companies focus on CSR, the worse the investor market may react (Christensenet et al., 2020; Hafenbrädl and Waeger,2021). Therefore, while performing CSR, enterprises should do better in the dissemination of true information and IRM. From this perspective, if appropriate and necessary investor relations management (IRM) is not implemented, companies that seriously implement CSR and promote sustainable development may be mistaken as "hypocritical" enterprises, which is not conducive to long-term sustainable development of enterprises. Moreover, the fulfillment of corporate social responsibility and the reinforcement of investor relations management jointly promote the sustainable development of enterprises. Enterprises enhance their competitiveness and sustainable development ability by fulfilling social responsibility, while investors realize their investment objectives and value pursuit by paying attention to and supporting enterprises with social responsibility. This virtuous circle helps to promote sustainable development of the whole society.”

Comments 2:(Research Design, Questions, Hypotheses, and Methods) The research design, questions, hypotheses, and methods are inadequately stated. The hypotheses development section (Section 2.2) is particularly weak and lacks clarity. The study should provide a more detailed explanation of how the hypotheses were formulated based on the literature review. The methods section (Section 3) needs a more thorough description of the data collection process, sample selection, and the rationale behind the chosen methodology.

Response 2: Thank you for your constructive feedback. We added literature in the section 2.2.Hypothesis development to better support hypothesis formulation. At the same time, the reasons for data sample selection and other related content are added in “Part 3. Research Design”. The details are as follows:

[page 5, in line 193]:“Corporate social responsibility (CSR) means that while creating profits and taking legal responsibility to shareholders and employees, enterprises emphasize their contribution to the environment, consumers and society. The fulfillment of corporate social responsibility not only helps to enhance the social image and brand value of the enterprise, but also conveys the signal to investors that the company pays attention to sustainable development. Theoretically, on the one hand, the fulfillment of corporate social responsibility can significantly enhance the social image and brand value of enterprises, and help enhance investors' trust and recognition of companies (Lee and Zhong, 2022; Eisingerich et al., 2023). When investors see companies actively taking social responsibility, they are more likely to put money into such enterprises, thus driving up the company's share price and market value. On the other hand, investor relations management requires companies to disclose relevant information in a timely, accurate and comprehensive manner to meet investors' information needs (Zhou et al., 2024). The performance of corporate social responsibility is essentially one of the important information investors focus on. Therefore, while fulfilling their social responsibilities, enterprises need to strengthen communication with investors and disclose relevant information in a timely manner, so as to enhance investors' understanding and recognition of the company in order not to be misunderstood on its true intention of CSR.“

[page 6, in line 233]:“On the one hand, the business performance typically constitutes the most influential factor impacting a company's performance in the capital market（Srimulyani et al., 2023）. Business performance directly reflects the profitability, operation efficiency, cost control ability, market position and other aspects of an enterprise (Jia and Zhang,2024; Zopounidis and Lemonakis, 2024). The capital market is a collection of investors' expectations about the future performance of enterprises. When an enterprise shows strong operating performance, it means that it has high profitability, good asset management and financial robustness, which will directly affect investors' confidence and expectation on the future development prospects of the enterprise. On the contrary, if the enterprise is not well run, investors will lower their expectations for the enterprise, resulting in a decline in stock prices and poor performance of the capital market. On the other hand, the "hypocritical" motives underlying CSR behavior are occasionally perceived as self-serving motives of professional managers or controlling shareholders (Quan et al., 2015). This potentially lead to a decline in business performance (Giuli & Kostovetsky, 2014), which will in turn lead to the poor performance of the capital market.

Theoretically, those "hypocritical" companies operating behind a facade may be more inclined to engage in active IRM to conceal their "hypocritical" behavior as much as possible, particularly after attaining a high social responsibility score. The main reason may be information asymmetry. When investors obtain corporate information, they may not be able to fully understand the real situation of the company. If enterprises overemphasize social responsibility and neglect the disclosure of business performance, it will easily lead to investors' misunderstanding of enterprises. In addition, investors may be affected by their own experience, emotions, biases and other factors when evaluating the value of enterprises, resulting in misunderstandings. For example, when a company's operating performance is poor, investors may be more likely to view its socially responsible behavior as "hypocrisy" or "showmanship."

[page 7, in line 264]:“First of all, considering the big difference between the financial data of financial companies and that of non-financial companies. We retrieved non-financial companies data from China’s “A” stock market. Secondly, the main dependent variable of this study is CSR, which was obtained from Hexun Network(www.hexun.com), and announced in 2010. We use the Investor Relations Interaction Index(IRII) to measure the level of IRM, obtained from the Nankai University Investor Relations Interaction Index Database, currently updated to 2019. To alleviate the impact of endogeneity issues, the explanatory variable is uniformly t+1 periods. Based on the availability of data, the actual sample period is from 2011 to 2020.“

Comments 3: (Arguments and Discussion of Findings) The arguments and discussion of findings are not sufficiently coherent or compelling. The discussion in Section 5 fails to engage with the results critically and does not adequately address potential limitations or alternative explanations. For instance, the study should consider the impact of confounding variables and provide a more balanced analysis of the findings.

Response 3:We are grateful for your kind comments. We sort out the Discussion in Section 5 (Further Discussion: Mechanism Analysis):

[page 16, in line 443]:“Part 5 is an extension of the basic results, mainly to further analyze the specific path of corporate social responsibility affecting investor relations management level.“

“The fifth part is mainly to further analyze the concrete path of corporate social responsibility affecting investor relations management level. First, the level of investment relationship management is measured by the Investor Relations Interaction Index (IRII). This index comprises five primary indicators: communication guarantee, online communication, telephone communication, on-site communication, and communication feedback. Taking these five indicators as explained variables, the research results show that CSR can only promote the network communication of investment relationship management and on-site communication in the interaction process. This indicates that corporate social responsibility tends to improve the level of investor relations management by strengthening network communication and on-site communication, which are important ways to improve IRM. Second, we introduce financial distress, financing constraints, and disclosure quality to discuss the relationship between CSR and IRM when CSR performs well. When an enterprise has a high social responsibility score and experiences severe financial distress, tight financing constraints, or poor information disclosure quality, it tends to engage in positive interaction with investors in the capital market. As mentioned in the theoretical part above, corporate social responsibility is probably a kind of "hypocritical behavior" to "cover up" the poor operating conditions of enterprises. In order to avoid being misunderstood, enterprises actively interact with investors and then transmit positive information.“

Comments 4: (Presentation of Empirical Research Results)The empirical research results are not clearly presented. The tables in Section 4 (e.g., Table 2 and Table 3) lack clear descriptions and are difficult to interpret. The presentation of results should include more detailed explanations and clearer visual aids to enhance comprehension. The robustness tests and their implications should be discussed in more depth.

Response 4:Thank you very much for your comments. Tables 2 and 3 are described more explicitly to emphasize the interpretation of the results:

[page 9, in line 328]:“Table 2 shows the results of baseline regression. Columns (1) and (2) are the results of verifying hypothesis 1, and columns (3) and (4) are the results of verifying hypothesis 2.“

[page 11, in line 363]:“Table 3 shows the empirical results of the high-dimensional fixed-effect model (one of the robustness tests). Columns (1)-(3) are the results of testing hypothesis 1, and columns (4)-(6) are the results of testing hypothesis 2.”

To verify hypothesis 1: the positive correlation between CSR and investor relationship management level, we set up a basic model (1). The results are shown in columns (1) and (2) of Table 2, indicating that under the same conditions, the higher the corporate social responsibility score, the higher the investor management level of the company. Hypothesis 1 is preliminarily verified. In order to verify hypothesis 2, the positive impact of corporate social responsibility on investor relations management will be more obvious when business performance is poor. On the basis of model (1), we add the interaction term between business performance and CSR score to obtain model (2). The results are shown in columns (3) and (4) of Table 2.

Table 3 shows the empirical results based on the high-dimensional fixed-effect model. Columns (1)-(3) of Table 3 show that the estimated coefficients of CSR are all significantly positive, which indicates that hypothesis 1 is still valid after controlling for more stringent fixed effects. Columns (4)-(6) of Table 3 show that the estimated coefficient of the interaction item (1.dum_ROA* C.SR) is also significantly positive, again verifying hypothesis 2.

Comments 5: (Adequate Referencing)The article is not adequately referenced. The literature review has significant gaps, and many key studies relevant to CSR and IRM are missing. For example, more recent studies on the relationship between CSR and stock price crash risk should be included to provide a comprehensive overview. The reference list must be updated and expanded to include all relevant sources.

Response 5:Thank you for your constructive comments.We have added studies on CSR and IRM, as follows:

[page 2, in line 53]:“within the field of CSR, scholars have continuously debated whether enterprises actively fulfilling social responsibilities are "genuinely altruistic" or merely engaging in "corporate hypocrisy". Some studies have pointed out that enterprises' purported fulfillment of social responsibilities may be a form of "saying one thing and doing another" (Fassin & Buelens, 2011; Fan et al., 2014). It is suggested that such behavior might be used by professional managers to conceal poor performance or unethical conduct within the organization (Tian & Wang, 2017). Thus, CSR is more likely to be perceived as a self-serving behavior on the part of managers (Quan et al., 2015). It is precisely because CSR may be misunderstood by market investors as a means for companies to cover up bad truths, enterprises should pay more attention to IRM when performing CSR.“

[page 2, in line 71]“IRM encompasses the communication and engagement between enterprises and investors, with the objective of cultivating transparent and steadfast investor relationships, attracting investment, and augmenting corporate value and reputation. The proactive discharge of social responsibilities by enterprises can bolster investors' confidence in the businesses and contribute to the stabilization of investor relations. Existing studies have found that through interactive communication with investors, enterprises can establish a closer investor relationship network, enhance investors' sense of identity and belonging to enterprises (Lee and Zhong, 2022), reduce the volatility and uncertainty of the stock market, and provide investors with a more stable and reliable investment environment (Zhang and Wang, 2024). Previous view believed that CSR was a way to cover up bad behaviors of enterprises, which would harm the interests of investors. As a result, the more companies focus on CSR, the worse the investor market may react (Christensenet et al., 2020; Hafenbrädl and Waeger,2021). Therefore, while performing CSR, enterprises should do better in the dissemination of true information and IRM. From this perspective, if appropriate and necessary investor relations management (IRM) is not implemented, companies that seriously implement CSR and promote sustainable development may be mistaken as "hypocritical" enterprises, which is not conducive to long-term sustainable development of enterprises. Moreover, the fulfillment of corporate social responsibility and the reinforcement of investor relations management jointly promote the sustainable development of enterprises. Enterprises enhance their competitiveness and sustainable development ability by fulfilling social responsibility, while investors realize their investment objectives and value pursuit by paying attention to and supporting enterprises with social responsibility. This virtuous circle helps to promote sustainable development of the whole society. “

[page 4, in line 125]“There are two opposing views on the risk of a share price crash. One is that CSR will reduce the risk of stock price crash (Kim et al., 2014; Zhou et al., 2021). Another view is that CSR will increase the risk of stock crash (Quan et al., 2015; Tian and Wang, 2017). CSR is an activity that pursues long-term sustainability. Improving the quality of CSR participation can reduce the synchronicity of stock prices (Gao et al., 2022). At the same time, the active implementation of CSR also helps to improve market returns (Yeh, 2021) and promote stock liquidity (Lin et al., 2023).”

[page 4, in line 136]“There are two possible reasons why the increase in CSR will increase the risk of stock price crash. First, companies may perform their social responsibilities out of self-serving motives to cover up their internal problems and risks. In such cases, CSR can become a "self-serving tool" rather than an expression of genuine concern for social and environmental interests. If companies over-package or falsely advertise their social responsibility activities, once these behaviors are revealed, it may cause distrust and panic among investors once these behaviors are revealed, thus increasing the risk of stock price collapse. Second, fulfilling social responsibility requires enterprises to invest certain resources and energy. If a company excessively pursues social responsibility while neglecting its core business and profitability, it may lead to uneven distribution of resources and increased operating pressure. In extreme cases, this can have a negative impact on a company's financial health and share price performance, increasing the risk of a share price crash. In other words, if the company conceals negative information or discloses insufficient information, the information may be suddenly released to the market after accumulation to a certain extent, which will have a huge impact on the stock price, thereby increasing the risk of stock price collapse.

Nonetheless, a growing number of scholars support the notion that CSR actually serves as a mitigating factor against stock price crash risk (Kim et al., 2014; Zhou et al., 2021; Huang et al., 2022; Wu et al., 2023). This is because the intuitive feeling is that the fulfillment of corporate social responsibility is often accompanied by higher information disclosure and transparency. When enterprises actively fulfill their social responsibilities, they are more inclined to disclose their business conditions and related information, which helps to reduce information asymmetry and the accumulation of negative information, thus reducing the risk of stock price crash. ”

Comments 6: (Conclusions Support)The results presented do not thoroughly support the conclusions. The conclusions section (Section 7) is overly brief and lacks a strong linkage to the empirical findings. The study should provide more robust evidence and a clearer connection between the results and the conclusions drawn.

Response 6:Thanks for your suggestion.We have revised the relevant content of Part 7 to better explain the relationship between the research conclusions and the research objectives:

[page 23, in line 561]“CSR performance is not only a way to win the favor of investors, but also an important means to improve the long-term sustainability of enterprises. However, within the field of CSR, scholars have continuously debated whether enterprises actively fulfilling social responsibilities are "genuinely altruistic" or merely engaging in "corporate hypocrisy". CSR implementation can sometimes not only fail to bring positive effects to enterprises, but may bring negative effects because it is misunderstood as an attempt to cover up bad facts. How to better realize the win-win situation of social responsibility and shareholder value has long been a challenge for both theoretical and practical circles. Investor relations management plays a crucial role in facilitating information communication for listed companies”

[page 23, in line 582]“The fulfillment of CSR is conducive to promoting the sustainable development of enterprises. The research conclusion provides a new way to promote sustainable development of enterprises from the perspective of CSR and IRM.”

Response to Reviewer 3 Comments

1. Summary

Thank you very much for taking the time to review this manuscript. Your valuable comments are very objective and correct. We have tried our best to revise the manuscript according to your suggestion. According to your opinions, the instructions are revised as follows. In order to facilitate your review, the modified part will be commented in red font.  All page numbers refer to the revised manuscript file with tracked changes. Please find the detailed responses below and the corresponding revisions/corrections highlighted/in track changes in the re-submitted files.

2. Questions for General Evaluation

Reviewer’s Evaluation

Response and Revisions

Does the introduction provide sufficient background and include all relevant references?

Can be improved

corresponding response in the point-by-point response letter

Are all the cited references relevant to the research?

Can be improved

corresponding response in the point-by-point response letter

Is the research design appropriate?

Can be improved

corresponding response in the point-by-point response letter

Are the methods adequately described?

Can be improved

corresponding response in the point-by-point response letter

Are the results clearly presented?

Yes

—

Are the conclusions supported by the results?

Can be improved

corresponding response in the point-by-point response letter

3. Point-by-point response to Comments and Suggestions for Authors

Comments 1: Abstract - should specify the methodology used.

Response 1: Thank you for pointing this out. We agree with this comment. In the abstract, we have added the methods used in the article as follows[page 1, in line 10]:

“We uses fixed-effect model, moderating effect model and instrumental variable method to examine the correlation between CSR and IRM. ”

Comments 2:Introduction - should open with a comprehensive definition of CSR. The authors could also consider discussing the linkages between CSR and technology. If it is not possible in their methodology, some references could be included in the presentation of CSR either in the introduction or theoretical framework. Include briefly also information on the methodology used.

Response 2: Thank you for your constructive feedback. We added the definition of CSR at the beginning of the introduction. The details are as follows:

[page 1, in line 28]:“Corporate social responsibility (CSR) refers to that in the course of its business operations, in addition to pursuing economic profits and satisfying the interests of shareholders, an enterprise also achieves a win-win situation for all its stakeholders (including employees, consumers, suppliers, communities, the environment, etc.) as well as wider social and natural environment. This pattern has gradually become a consensus (Porter and Kramer, 2011). The concept emphasizes that while pursuing economic benefits, companies must balance social, environmental and ethical responsibilities to achieve sustainable development(Dzage & Szabados, 2024). “

Regarding the connection between corporate social responsibility and technology, firstly, corporate social responsibility (CSR) can be the source of technological innovation. By fulfilling their social responsibilities, enterprises identify, analyze and respond to social needs, thereby identifying opportunities for technological innovation. For example, companies may invest in research and development to develop more environmentally friendly production technologies or products in order to reduce their negative impact on the environment. This demand-oriented innovation can not only help solve social problems, but also enhance technological strength and market competitiveness of enterprises. Secondly, technology can provide more possibilities and strong support for enterprises to fulfill their social responsibilities. For example, by applying advanced technologies such as big data and artificial intelligence, enterprises can identify and analyze social problems more accurately and formulate more effective solutions. Moreover, technology can improve the efficiency and effect of enterprises in fulfilling social responsibility and reduce its cost. Companies can also use new technologies to develop more environmentally friendly, safer and more efficient products and services to meet the needs of society in terms of environment, health and safety. However, we believe that this paper mainly discusses the relationship between corporate social responsibility and investor relationship management based on the perspective of interaction between listed companies and investors, and does not involve much technology, so the relationship between the two is rarely mentioned in this paper.

Comments 3: Literature review - Could explain more in detail the contribution of some studies references such as the long list in lines 106-107.

Response 3:We are grateful for your kind comments. We provide some references in the article for a more detailed explanation:

[page 4, in line 122]:“The existing literature primarily focuses on the capital market's response following active fulfillment of social responsibilities by enterprises, with particular attention given to stock price crash risk (Quan et al., 2015; Tian & Wang, 2017; Huang et al., 2022; Kim et al., 2014; Zhou et al., 2021; Wu et al., 2023), stock price synchronicity (Gao et al., 2022), market return rate (Yeh, 2021), stock liquidity (Lin et al., 2023), investor response (Zhou & Gan, 2022), etc. There are two opposing views on the risk of a share price crash. One is that CSR will reduce the risk of stock price crash (Kim et al., 2014; Zhou et al., 2021). Another view is that CSR will increase the risk of stock crash (Quan et al., 2015; Tian and Wang, 2017). CSR is an activity that pursues long-term sustainability. Improving the quality of CSR participation can reduce the synchronicity of stock prices (Gao et al., 2022). At the same time, the active implementation of CSR also helps to improve market returns (Yeh, 2021) and promote stock liquidity (Lin et al., 2023).“

Comments 4:Hypothesis development - it could be useful to provide here a more comprehensive title for 2.2.1 as "correlation/linkages between CRS and IRM". Maybe there is a typo relating to the hypothesis. Hypothesis 1 for lines 192-193.

Response 4:Thank you very much for your comments. Tables 2 and 3 are described more explicitly to emphasize the interpretation of the results:

[page 5, in line 192]:“We have changed the title of 2.2.1 to ’The correlation between CRS and IRM ’. Meanwhile, we have corrected the error in hypothesis 1.“ 

Comments 5: Research Design - Provide in the footnote some explanation regarding the Hexum Network. Include some information regarding the relationship between CSR and legal framework, specifically related to the case of China. For instance: Halkos, G. E., & Nomikos, S. N. (2021). Reviewing the status of corporate social responsibility (CSR) legal framework. Management of Environmental Quality: An International Journal, 32(4), 700-716. Line 208 could benefit from explaining here what IRII is.

Response 5:Thank you for your constructive comments. We have provided an explanation of Hexun and information on the relationship between corporate social responsibility and legal framework in a footnote, with specific additions as follows:

[page 7]:“Hexun Information Technology Co., LTD. (Hexun.com) is a leading financial information and online mobile financial services provider in China. Founded in 1996, Hexun is one of the earliest professional ICPs in China. It is a website with Internet news and information service license, information network communication audiovisual program license and securities investment consulting qualification. Hexun actively fulfills its social responsibility by providing high-quality financial information and services to help investors better understand market dynamics and make wise investment decisions.“

[page 2]“Corporate social responsibility and legal framework (information relevant to the situation in China) : Environmental Protection Law of the People's Republic of China (revised in 2014); Company Law of the People's Republic of China (Fourth Amendment in 2023). For example, Article 5 of the Company Law clearly stipulates: "In conducting business activities, a company must abide by laws and administrative regulations, abide by social ethics and business ethics, be honest and trustworthy, accept the supervision of the government and the public, and assume social responsibilities." This provision provides a legal basis for the fulfillment of corporate social responsibility. ”

IRII is used to represent the level of investment relationship management index. IRII is from the Investor Relations Interactive Index database of Nankai University, which was created in 2012.

Comments 6: Results and discussion - When commenting on your results and citing previous literature, it is necessary to explain better the linkages between your results and previous studies cited.

Response 6:Thanks for your suggestion. We have already cited the studies above in the empirical results analysis and discussion section, and added the following in Part 4:

[page 10, in line 334]“As mentioned in the theoretical part above, when corporate social responsibility records are good, enterprises will strengthen communication with investors and pay more attention to investor relationship management in order to reduce market investors' perception of hypocrisy and avoid being misunderstood as "hypocritical" enterprises (Chen et al., 2020).”

[page 10, in line 342]“This confirms the hypothesis mentioned above: CSR may not be the initial goal of enterprises, but they have to participate in CSR to cover up bad information as a red herring, which often leads to the decline of business performance of enterprises (Giuli and Kostovetsky, 2014). When the business performance of enterprises is poor, in order to reduce the financial distress of enterprises, enterprises are likely to strengthen the interaction and communication with investors in order to prevent misunderstanding (Gangi et al. 2020).”

Comments 7: Conclusions - It could be beneficial here to recall all your research questions as included in the introduction. Include also the limitations of your study and avenues of future research to propose.

Response 7:We are grateful for your helpful comments. We reviewed the research questions in Section 7 (Conclusions) and added the following relevant information:

[page 23, in line 561]“CSR performance is not only a way to win the favor of investors, but also an important means to improve the long-term sustainability of enterprises. However, within the field of CSR, scholars have continuously debated whether enterprises actively fulfilling social responsibilities are "genuinely altruistic" or merely engaging in "corporate hypocrisy". CSR implementation can sometimes not only fail to bring positive effects to enterprises, but may bring negative effects because it is misunderstood as an attempt to cover up bad facts. How to better realize the win-win situation of social responsibility and shareholder value has long been a challenge for both theoretical and practical circles. Investor relations management plays a crucial role in facilitating information communication for listed companies.

It is found that when enterprises actively fulfill their social responsibilities, they place greater emphasis on IRM with the capital market. On the one hand, when enterprises engage in proactive social responsibility efforts, they aim to establish a positive and responsible image among investors. On the other hand, concerns arise regarding the potential misinterpretation of outstanding social responsibility performance as "hypocritical". Therefore, companies seek to actively engage with investors to mitigate any negative perceptions that may impact the company's value. The above conclusion remains valid after accounting for endogeneity issues and conducting a series of robustness tests. In the mechanism analysis, it is found that CSR primarily tends to improve the level of IRM by strengthening online and on-site communication. Furthermore, when financial distress is more serious or the financing constraint are tighter or the quality of accounting information disclosure is poor, enterprises are more inclined to actively interact with investors in the capital market to prevent the "hypocrisy" behavior that may be misinterpreted as social responsibility. In the extended analysis, the research results of this paper support that the proactive implementation of CSR significantly mitigates the risk of stock price crash. It is postulated that IRM serves as a crucial influencing mechanism in this context.The fulfillment of CSR is conducive to promoting the sustainable development of enterprises. The research conclusion provides a new way to promote the sustainable development of enterprises from the perspective of CSR and IRM.”

[page 24, in line 593]”Research limitations and future prospects: Through CSR practice, enterprises can have a positive social impact, achieve sustainable development, and bring more robust capital market performance and business performance. However, the specific impact of investor relations management from the perspective of corporate social responsibility on the capital market and business performance of enterprises still needs to be further explored and studied. In the future, corporate social responsibility and investor relationship management can be further studied from different aspects such as investor trust and loyalty, risk management, etc., to reveal deep mechanism and influence path of these relationships, so as to provide enterprises with more effective investor relationship management strategies and promote sustainable development and value creation of enterprises.”