Industry and Stakeholder Impacts on Corporate Social Responsibility (CSR) and Financial Performance: Consumer vs. Industrial Sectors

Comments and Suggestions for Authors:

Thanks for your efforts on this article. I read it carefully and found no interests with current version.

I have the following concerns about your article.

1.       Logical background on Industrial effects on stakeholder. You have a big assumption about the stakeholders affecting the relationship between CSR-P and Financial-P. I get it. However, I do not find why consumer products represent such a good stakeholder engagement and industrial products do not. You need cite more prior studies to strengthen your logic on this matter. Otherwise, your results are not very interesting.

Thank you for taking the time to review our article and providing your valuable feedback. We appreciate your thoughtful comments, and we have taken them into consideration to improve the logical background of our study.

1.       Regarding your concern about the assumption of stakeholder effects on the relationship between CSR performance and financial performance in consumer and industrial product markets, we agree that further support from prior studies would enhance the robustness of our findings. In response to your suggestion, we have conducted a more comprehensive literature review and included additional relevant citations to strengthen the rationale behind our hypothesis. These new citations provide insights into the specific stakeholder engagement patterns observed in consumer product markets, which contribute to the positive relationship between CSR performance and financial outcomes. Conversely, the limited stakeholder rewards observed in industrial product markets have been shown to lead to a weaker association between CSR performance and financial performance.

We hope these additions and revisions address your concerns and add value to the article. If you have any further recommendations or comments, we are eager to address them.

We have specifically included other references (below) and add additional comment to support the findings and related argument. Please refer to the introduction, and literature review sections. (Gavana et al., 2022; Khan, 2022; Kim & Choi, 2022; Li et al., 2019; Shin et al., 2023; Zhou et al., 2022). For instance, please refer to the result section (4.2.2 Industrial impact analysis- Last paragraph and line 9) where we discuss the product market reaction to firms with higher social responsibility performance.

Comments and Suggestions for Authors:

2.       Empirical test: why didn't you add interaction term with industrial divider (consumer products vs. industrial products). You just list out two separate test sets, and there are no statistical inference on your findings. Please re-run your estimation by including an interaction term.

Besides, double-check sample size: Table 4 has a total of 3,416 (your main table), but Table 5 has 2,116 and 1,305 for two test sets, ending up with 3,421. I do not get it. Why are the sample sizes different?

2.       Thank you for your understanding and feedback regarding the use of longitudinal panel regression analysis and the division of industries based on their product markets.

We acknowledge the importance of brevity and clarity in presenting our research findings. As you rightly pointed out, the use of longitudinal panel regression analysis allowed us to explore the relationship between CSR performance and financial outcomes over an extended time period, providing valuable insights into the long-term impact of CSR. In light of your comments, we have carefully considered the presentation of our results and the number of tables provided in the research study. While we aimed to maintain a concise format, we understand the significance of providing comprehensive statistical information to support our findings.

To address this concern, we have revised the article to strike an optimal balance between brevity and the provision of necessary statistical inferences. We have ensured that the main results are presented clearly and that relevant statistical tests, including the interaction term analysis, are included to support the robustness of our conclusions. We believe these modifications have strengthened the article's clarity and rigor, and we hope the revised version aligns more closely with your expectations.

Thank you for bringing this to our attention. We apologize for any confusion regarding the sample sizes presented in the tables. The difference in sample sizes between Table 4 and Tables 5 is due to the specific data categorization of firms into different product markets. To enhance the clarity of our presentation, we ensure that these differences in sample sizes are adequately explained in the revised version of the article.

3.       Writing: You have missing section 4.2 (where is it?)

Please revise my concerns above

3.     Thank you for your careful review of our manuscript, and we appreciate your valuable feedback. We apologize for the oversight in the organization of the manuscript. Section 4.2 is a main sub-section of the results section followed by two sub-heading 4.2.1 CSR impact analysis and 4.2.2 Industrial impact analysis. We have revised the contents of this main sub-section in the updated manuscript to provide4 an introduction to these two sub-headings.

Comments and Suggestions for Authors

Dear authors,

Your paper is very insightful. However, before approving it I have a number of minor comments and questions.

First, kindly state the date you retrieved your data. Also, I know Bloomberg’s data is proprietary but it would be great to include a link to your data source. This would help towards transparency and reproducibility.

1.       Thank you for your positive feedback on our paper, and we appreciate your valuable comments and questions.

In response to your query regarding the data retrieval date and data source transparency, we would like to provide the following information:

The data used in our study was retrieved from Bloomberg's proprietary database. However, we apologize for the oversight in not explicitly stating the date of data retrieval in the manuscript. The data retrieval and following update date was [between 2019, 2020 and last update in 2022].

Regarding the data source transparency, we understand the importance of providing clear information to ensure transparency and reproducibility of our research. Unfortunately, due to Bloomberg's data policy and licensing restrictions, we are unable to share a direct link to the data source. As Bloomberg's data is proprietary, access to the dataset requires a subscription or license agreement. However, in the revised manuscript, we will include a more detailed explanation of our data retrieval process and acknowledge the use of Bloomberg's proprietary data for transparency purposes. We will also explore other options to enhance data transparency, such as providing additional information on the variables used and the methodology for data collection (https://www.bloomberg.com).

Comments and Suggestions for Authors

Second, I have some reservations with using Tobin’s Q to measure financial performance (even though you also used ROA). Although I have read the studies you cited, I am still not fully convinced it is the best metric for measuring financial performance. Tobin’s Q is primarily a business valuation metric, not precisely a financial performance one. My question is, why was Tobin’s Q selected instead of more conventional financial assessment indicators such as revenue, profit, income, cash flow, or even indicators in a company’s balance sheet such as debt and capital. Was it due to data availability reasons? What was your reasoning behind it please? Your response would put to rest any concerns of data selection bias.

Overall, I think your paper provides some very insightful perspective.

Good luck!

2.       Thank you for your feedback and valuable comments regarding the use of different performance measures in our study. We appreciate the opportunity to clarify our rationale behind selecting Tobin's Q alongside ROA as performance indicators.

Firstly, we acknowledge the significance of using multiple performance measures to address potential limitations associated with a single metric. By employing both ROA and Tobin's Q, we aimed to capture different aspects of financial performance and provide a comprehensive evaluation of the relationship between CSR performance and financial outcomes.

Regarding the selection of Tobin's Q, we recognize your reservations and agree that it is primarily a business valuation metric. However, Tobin's Q has been commonly used in the literature to assess financial performance, particularly in studies examining the relationship between CSR and firm performance. Its usage has been supported by prior research, which highlights its ability to measure a firm's efficiency in utilizing its assets and generating shareholder value.

The reasoning behind choosing Tobin's Q over more conventional financial indicators, such as revenue, profit, income, cash flow, or balance sheet indicators, was driven by the specific focus of our study. We aimed to investigate the long-term impact of CSR performance on financial performance, encompassing both accounting-based and market-based perspectives. Tobin's Q, as a market-based performance measure, provides insights into the market's perception of a firm's financial prospects and growth opportunities. This complements the traditional accounting-based measure (ROA) and allows us to examine how CSR performance influences both financial accounting measures and market valuation.

Regarding data availability, we confirm that the availability of data for Tobin's Q was one of the reasons for its inclusion in our study. Additionally, Tobin's Q has been extensively used in prior research, facilitating comparability and enabling us to contextualize our findings within the existing literature.

Comments and Suggestions for Authors

Dear authors,

Congratulations for this well-written piece of study. Editors will communicate their decisions to you

1.       Thank you for your kind words and positive feedback on our study. We truly appreciate your support and encouragement.

We eagerly await the final decision from the editors and look forward to any additional feedback or suggestions they may have to further enhance the quality and contribution of our research.

Comments and Suggestions for Authors

Dear Researcher

Congrats, it is a very interesting and well written paper.

Thank you for the opportunity to read this interesting paper. After carefully reviewing your paper, my view is that it is a good paper with a potential to contribute to the literature.

The study provides an overarching theoretical framework that explains the underlying predictions and hypotheses of interest. It also draws on appropriate references, but I suggest enriching it with recent literature directly relevant to the study:

Gavana, G., Gottardo, P., & Moisello, A. M. (2022). Related party transactions and earnings management: The moderating effect of ESG performance. Sustainability, 14(10), 5823.

Khan, M. A. (2022). ESG disclosure and Firm performance: A bibliometric and meta analysis. Research in International Business and Finance, 61, 101668.

Shin, J., Moon, J. J., & Kang, J. (2023). Where does ESG pay? The role of national culture in moderating the relationship between ESG performance and financial performance. International Business Review, 32(3), 102071.

Zhou, G., Liu, L., & Luo, S. (2022). Sustainable development, ESG performance and company market value: Mediating effect of financial performance. Business Strategy and the Environment, 31(7), 3371-3387.

Methodology is fine and provides adequate robustness analyses.

Tables are clear but I suggest to add a table containing variables classification (dependent, independent and control variables), operationalization and sources Conclusions adequately discuss the research questions. They are supported by empirical results and

are consistent with the theoretical framework as well as with the literature review.

1.       Thank you for your positive feedback and constructive comments on our paper. We appreciate your recognition of the potential contribution of our research to the literature.

We agree with your suggestion to enrich our theoretical framework with recent relevant literature. We have carefully reviewed and included the references you provided to strengthen the theoretical underpinnings of our study.

Regarding the tables, Appendix B provides a comprehensive overview of the variables used in our analysis, including their classification (dependent, independent, and control variables), operationalization, and data sources. This addition will enhance the clarity and transparency of our methodology.

Once again, we thank you for your valuable input, and we are committed to addressing all your comments to improve the quality and robustness of our research.

Comments and Suggestions for Authors

Dear authors,

Your paper is very insightful. However, before approving it I have a number of minor comments and questions.

First, kindly state the date you retrieved your data. Also, I know Bloomberg’s data is proprietary but it would be great to include a link to your data source. This would help towards transparency and reproducibility.

Second, I have some reservations with using Tobin’s Q to measure financial performance (even though you also used ROA). Although I have read the studies you cited, I am still not fully convinced it is the best metric for measuring financial performance. Tobin’s Q is primarily a business valuation metric, not precisely a financial performance one. My question is, why was Tobin’s Q selected instead of more conventional financial assessment indicators such as revenue, profit, income, cash flow, or even indicators in a company’s balance sheet such as debt and capital. Was it due to data availability reasons? What was your reasoning behind it please? Your response would put to rest any concerns of data selection bias.

Overall, I think your paper provides some very insightful perspective.

Good luck!

1.       Thank you for your positive feedback on our paper. We appreciate your valuable input and would like to address your concerns. The data for this study were retrieved from Bloomberg's proprietary database. As per their terms and conditions, we are not allowed to provide direct links to the data source. However, we can confirm that the data were accessed from 2018 and the data collected between the period of 2018 to early 2022. We acknowledge the importance of transparency and reproducibility in research, and we have followed best practices to ensure the validity of our findings. If you have any further questions or require additional information, please do not hesitate to contact us.

2.       We appreciate your thoughtful review and your attention to the choice of financial performance metrics in our study. The selection of Tobin's Q alongside ROA was based on careful consideration and several reasons.

Firstly, we aimed to capture both accounting-based and market-based measures of financial performance. While conventional financial indicators such as revenue, profit, income, and cash flow provide valuable insights into a firm's financial performance, they primarily reflect short-term financial outcomes. On the other hand, Tobin's Q offers a market-based perspective, reflecting the market value of a firm relative to its book value. This metric considers not only the current financial position but also the expectations and prospects for future growth and profitability.

Secondly, Tobin's Q has been widely used in the literature to assess the relationship between CSR performance and financial outcomes. Its application in prior research provides a basis for comparability and facilitates the integration of our findings with existing studies.

Thirdly, the choice of metrics is also influenced by data availability. While we acknowledge that other financial indicators could provide valuable insights, the availability and consistency of Tobin's Q and ROA across our dataset allowed for a robust and comprehensive analysis.

Overall, the inclusion of Tobin's Q alongside ROA helps us to provide a more comprehensive assessment of the relationship between CSR performance and financial performance, capturing both accounting and market-based perspectives. We have taken steps to mitigate potential data selection bias by following established research practices and acknowledging the limitations and assumptions of our chosen metrics. We hope this explanation addresses your concerns and provides clarity on our reasoning for selecting Tobin's Q as one of our financial performance indicators. Should you have any further questions or suggestions, please feel free to let us know. We value your input and look forward to addressing any further concerns you may have.