Do investors’ reactions to CSR-related news communication differ by shareholder? An empirical analysis from Japan

What is it about?

This paper examines the differences in investors’ reactions toward firms’ CSR-related news announcements between individuals and institutions. Analyzed by the short-term event study and OLS methods using a unique CSR dataset collected from newspapers in Japan from 2001 to 2016, the study finds, first, the different reactions toward CSR-related news announcements among shareholders. Second, the results indicate that individual investors are more sensitive to CSR-related positive news, whereas institutional investors are more concerned about the negative news, providing one of the reasons for mixed results in the studies on the CSR and financial performance linkage. Those findings indicate that CSR-related news affects investors’ investing behaviors differently based on their purpose, ability and accessible information. This study also deepens our understanding on the different investing behaviors toward CSR-related announcements by shareholder type. Second, different attitudes among investors require different IR approaches depending on the type. It also provides valuable implications not only for Japanese business managers or policymakers but also for those from countries with a similar stage of market maturity in the CSR context.

Featured Image