Corporate Social Responsibility and Investor Relations Management: Evidence from China

Abstract

The implementation of corporate social responsibility (CSR) in conjunction with proficient investor relations management (IRM) can enhance the reputation and appeal of enterprises, thereby fostering the sustainable development of enterprises. This paper examines the correlation between CSR and IRM by exploring the potential misinterpretation of socially responsible actions by listed companies as “hypocrisy”. We use the fixed effect model, moderating effect model and instrumental variable method to examine the correlation between CSR and IRM. The findings indicate that actively fulfilling corporate social responsibility can enhance interaction and communication between listed companies and investors in the capital market, thereby mitigating the risk of being perceived as “hypocrisy”. This positive effect is particularly pronounced when companies are experiencing poor operational performance. These conclusions remain robust even after conducting various tests to address endogeneity concerns. In terms of the underlying mechanisms, corporate social responsibility primarily enhances investor relations management through strengthening network communication and on-site interactions. Moreover, enterprises are more inclined to proactively interact with investors in the capital market when companies face severe financial difficulties, stringent financing constraints, or poor quality of information disclosure. Additionally, our study extends its analysis to elucidate how corporate social responsibility can mitigate the risk of stock price crashes from the perspective of investor relations management.