Corporate Disclosure Strategies among Chinese Firms: Insights from CSR Reporting, Value-reducing M&As, and the COVID-19 Pandemic

Abstract

The overarching theme of this thesis centres on corporate disclosure strategies of Chinese A-share firms in varying contexts. It comprises three studies, each delving into how firms adapt their disclosure practices in response to peer influences, the challenges of investor relations management, and the demands of crisis communication, respectively. The first study (Chapter 2) investigates industry peer effects under China’s selective mandatory corporate social responsibility (CSR) disclosure regime. It reveals that non-mandated firms are more likely to voluntarily disclose CSR information when a higher proportion of industry peers are mandated to do so, exhibiting a positive peer effect. On the other hand, firms that already engage in voluntary CSR disclosures tend to cease these practices as the number of mandated disclosers in their industry increases, indicating a negative peer effect where firms free-ride on peers’ mandatory disclosures. The second study (Chapter 3) examines how firms strategically manage their disclosure tone after value-reducing mergers and acquisitions (M&As). The findings suggest that acquirers tend to employ a negative tone in their CSR reports aimed at institutional investors, while adopting a positive tone on the Interactive Investor Platform (IIP) that is mainly used by retail investors. This inconsistency in disclosure tone between the platforms appears driven by an intent to inform institutional investors and, at the same time, mislead retail investors, consistent with the acquirer “speaking in two tongues” after negative events. The third study (Chapter 4) focuses on firms’ communication strategies during the novel Coronavirus disease (COVID-19) pandemic. A difference-in-difference (DID) analysis reveals that firms subject to complete or partial lockdown shift to a more positive reply tone on the IIP in response to a less positive ask tone from retail investors. This overly optimistic tone, linked to poorer future firm performance, suggests firms’ attempt to mislead retail investors during the lockdown; however, the market reaction tests show that the impact of such opportunistic behaviour is short-lived.