Can Mandatory Disclosure of CSR Information Drive the Transformation of Firms towards High-Quality Development?

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The article does not refer to the fact that CSR activities involve costs, which limits profits in the short term.

It is necessary to expand (give examples) what CSR elements were disclosed.

In the discussion (or conclusions) section, the authors should address two questions:

- was the group of enterprises forced to disclose CSR reports already characterized by higher than average (for the Chinese economy) efficiency before this decision?

- isn't the reason for the success of the surveyed companies their previous development (e.g. incurring initial CSR costs) as much as the need for CSR reporting?

Author Response

1.The article does not refer to the fact that CSR activities involve costs, which limits profits in the short term.

Thank you for your suggestions, our additions and modifications are listed below:

See the introduction ‘For example, it has been pointed out that CSR expenditure and green transformation undertaken by firms to meet mandatory CSR disclosure requirements will undoubtedly increase their short-term costs and affect their short-term profitability (Chen et al., 2018). ’

Reference：Chen, Y.C.; Hung, M.; Wang, Y. The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China. J. Journal of accounting and economics, 2018, 65, 169-190.

2.It is necessary to expand (give examples) what CSR elements were disclosed.

In the discussion (or conclusions) section, the authors should address two questions:

- was the group of enterprises forced to disclose CSR reports already characterized by higher than average (for the Chinese economy) efficiency before this decision?

- isn't the reason for the success of the surveyed companies their previous development (e.g. incurring initial CSR costs) as much as the need for CSR reporting?

 Thank you for your suggestions, our additions and modifications are listed below:

In the introduction section, we have added CSR disclosures: ‘The content of the disclosure is closely related to the sustainable development of the enterprise, in particular, the Notice requires the regulated enterprise to make qualitative or quantitative disclosure of information from ten aspects, such as shareholder relations, creditor relations, employee relations, supplier relations, customer relations, environmental protection, public relations, philanthropy, CSR policy, working conditions and inadequate performance of CSR, etc., and the more detailed the disclosure of the content, the higher the quality of the enterprise's CSR information.’

Secondly, it is important to explain that we are using the DID model, an approach that presupposes that the experimental and control group samples are previously similar or comparable, hence we use the PSM approach in our robustness tests. However, to complement the trend consistency of the economy's average efficiency, we add the following test:

In order to more visually represent the trend change of TFP in the experimental and control groups before and after the occurrence of the exogenous event, we also present the results of the dynamic trend change in the form of pictures. As shown below, Figures 1 and 2 show the trend changes of TFP_FE and TFP_LP during the sample period, respectively. The horizontal axis in the two figures indicates the time (year), the vertical axis indicates the TFP, and the dashed and solid lines correspond to the trends of the TFP of the experimental group firms and the control group firms, respectively. In the two figures, it can be seen that the TFP of the two groups of firms in the Notification have roughly the same trend of change. After the publication of the Notice, the upward trend of TFP of enterprises in the experimental group is significantly larger than that of enterprises in the control group.

However, it is clear that the effect of this manipulation can be corroborated with our trend-testing model, and we have previously preferred to retain just the results of the trend test, given the space issue. That is, the regression results of equation (2).

In addition, with reference to the comments of other experts, we have made changes and additions to the article in terms of innovation, practicality of policy recommendations, selection of firm data and description of variables, as shown in the blue font section of the article.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

Content and Contribution

The paper investigates the effects of mandatory CSR disclosure on TFP in Chinese companies. This study is of interest and and relevant given the growing emphasis on sustainability and CSR in the corporate governance. The findings that mandatory CSR disclosure provides a positive influence to TFP provides insight within this area.

Methodology

The choice of the DID methodology is appropriate given the paper’s focus on the impact of an exogenous regulatory change. The use of panel data covering a substantial sample of firms over a significant period enhances the robustness of the findings my only concern is the time frame chosen.

However, the methodology section would benefit from a more detailed discussion on the choice of control variables and the rationale behind the specific years chosen for analysis because there was no reason or justification for this.

Data Set

The data set comprising A-share listed firms from 2006 to 2013 is robust and suitable for the analysis undertaken but  rationale behind the specific years chosen for analysis because there was no reason or justification for this. However, the paper could improve by providing more details about the data sources  The paper should also discuss any potential limitations of the data, the reasons behind missing data for some firms and the selected period of time.

List of Improvements

• Clarify Variables: More detailed definitions and justifications for the choice of variables used.
• Expand Literature Review: The literature review could be expanded to include more recent studies on mandatory CSR disclosure.
• Policy Implications: While the paper discusses the policy implications of the findings, a more thorough exploration of how these implications interact with broader economic and regulatory trends in China and globally would provided a wider perspective and value.
• Statistical Significance: Clarifications on statistical significance would improve the transparency and interpretability of the results.
• Graphical Representations: Including more charts and graphs to visually represent the trends and relationships discussed could elevate this paper understanding and readability.

Overall, the paper is well structured and has significant insight 

Author Response

1.Content and Contribution

The paper investigates the effects of mandatory CSR disclosure on TFP in Chinese companies. This study is of interest and and relevant given the growing emphasis on sustainability and CSR in the corporate governance. The findings that mandatory CSR disclosure provides a positive influence to TFP provides insight within this area.

2.Methodology

The choice of the DID methodology is appropriate given the paper’s focus on the impact of an exogenous regulatory change. The use of panel data covering a substantial sample of firms over a significant period enhances the robustness of the findings my only concern is the time frame chosen.

3.However, the methodology section would benefit from a more detailed discussion on the choice of control variables and the rationale behind the specific years chosen for analysis because there was no reason or justification for this.

Thanks to your suggestion, we have added justification for the use of control variables for this purpose:

In general, the larger the size of a firm, the more resources it has at its disposal, which creates a strong support for R&D activities and the long-term productivity of the firm. In addition, some studies have shown that in terms of the age of the firm's listing may be positively correlated with its innovation awareness [4], and firms with better profits usually have a higher level of competition, so their need for innovation is more pronounced, which has a positive effect on both the firm's TFP. Finally, the shareholding ratio of major shareholders and revenue growth rate of enterprises are related to the management efficiency and growth of enterprises, which will affect the productivity of enterprises to a certain extent [3].

4.Data Set

The data set comprising A-share listed firms from 2006 to 2013 is robust and suitable for the analysis undertaken but  rationale behind the specific years chosen for analysis because there was no reason or justification for this. However, the paper could improve by providing more details about the data sources  The paper should also discuss any potential limitations of the data, the reasons behind missing data for some firms and the selected period of time.

Thank you for your suggestions, our additions and modifications are listed below:

Considering that this paper studies the impact of CSR policy shocks, a traditional DID model is used, which is better able to assess the impact of exogenous shocks relative to an OLS model, but the model requires that the data needs to satisfy a certain degree of symmetry, and therefore the sample time cannot be chosen to deviate too far from the time of the policy release, which makes our data potentially slightly outdated. In the discussion section, we will account for this disadvantage. In addition, the choice of sample time will be explained in a related supplementary note（see: Considering the effectiveness of the exogenous shock of the release of the Notice in 2008, the initial sample of this paper includes all A-share listed companies from 2006 to 2013.）.

In the discussion section, we have added the following:

See:‘Thirdly, in developed countries, voluntary disclosure of CSR information is the norm, while China's CSR process is more backward, so mandatory CSR reports tend to be more reliable than voluntary ones, as reflected in the comprehensiveness, identifiability and horizontal comparability of disclosures. Therefore, studying the impact of mandatory CSR disclosure on firms can better eliminate the interference of noisy information. In addition, the literature has also examined the improvement of CSR disclosure quality from this perspective [3]. Unlike this literature, we cite the traditional DID model, which is a better measure of the impact of policy shocks than the OLS model, although the model requires that our data must satisfy a certain degree of symmetry, i.e., the timing cannot deviate from policy releases too far back in time, which makes our data potentially slightly outdated. In future research, additional robustness tests using multi-period DID or OLS methods can be considered to compensate for the disadvantage of outdated data caused by the traditional DID model.’

5.Clarify Variables: More detailed definitions and justifications for the choice of variables used.

Expand Literature Review: The literature review could be expanded to include more recent studies on mandatory CSR disclosure.

Thanks to your suggestion, we have added justification for the use of control variables for this purpose:

In general, the larger the size of a firm, the more resources it has at its disposal, which creates a strong support for R&D activities and the long-term productivity of the firm. In addition, some studies have shown that in terms of the age of the firm's listing may be positively correlated with its innovation awareness [4], and firms with better profits usually have a higher level of competition, so their need for innovation is more pronounced, which has a positive effect on both the firm's TFP. Finally, the shareholding ratio of major shareholders and revenue growth rate of enterprises are related to the management efficiency and growth of enterprises, which will affect the productivity of enterprises to a certain extent [3].

Secondly, in order to increase the logic of the article and the findings of the latest literature, we have added the following citations and extended the literature review:

1. Escamilla‐Solano, S.; Fernández‐Portillo, A.; Sánchez‐Escobedo, M C, et al. Corporate social responsibility disclosure: Mediating effects of the economic dimension on firm performance. J. Corporate Social Responsibility and Environmental Management. 2024, 31, 709–718.
2. Wang, L.; Li, Y.; Li, X. Corporate social responsibility disclosure, media coverage and financial performance: An empirical analysis in the chinese context. J. The Singapore Economic Review. 2024, 69, 251–268.
3. Liang, X.; Chen X C. Mandatory corporate social responsibility disclosure and financial constraints: Evidence from China. J. International Review of Economics & Finance, 2024, 89: 954-974.

See ‘Moreover, Escamilla‐Solano et al. argued that there is a consensus in the academic community on the improvements brought about by the European Directive in terms of disclosure of CSR actions by companies and the reduction of information asymmetry between the company and its stakeholders [17].’

‘And the good reputation that comes with a well-disclosed CSR report will attract more media coverage, which in turn boosts corporate financial performance [19]. while poorly managed firms may also distract investors by disclosing friendly CSR information to hide management's self-interested activities.’

‘Not only that, Liang and Chen emphasised that the mandatory CSR dis-closure will exacerbate firms’ financial constraints by a plausible channel of controlling shareholder expropriation [21].’

6.Policy Implications: While the paper discusses the policy implications of the findings, a more thorough exploration of how these implications interact with broader economic and regulatory trends in China and globally would provided a wider perspective and value.

Thanks to your suggestion, Considering that China's CSR process is relatively lagging behind, but China's economic volume is increasing day by day, therefore, in the conclusion section, we intend to supplement our conclusions from the perspective of the contribution of China's CSR progress to global environmental and economic sustainability as follows:

(5) As the world's second-largest economy, China's CSR changes have the potential to have a significant impact on global economic sustainability and the development of related regulations, so accelerating China's CSR process is imperative, as it will help the world's major economies to integrate and harmonise their concepts of sustainability, and it will be significant for the future development of the global climate, society, and humanity together.

7.Statistical Significance: Clarifications on statistical significance would improve the transparency and interpretability of the results.

Thanks to your suggestion, we have added a statistical description of the preliminary regression results:

See: ‘The regression outcomes for equation (1) are provided in Table 4. In columns (1) and (2), coefficients for Treated* Post, excluding control variables, are 0.119 and 0.196 respectively, both demonstrating significance at the 1% level and indicating a positive effect. Similarly, in columns (3) and (4), coefficients for Treated* Post with the control variables are 0.139 and 0.206 respectively, also significant at the 1% level, indicating that, relative to the control group, firms in the experimental group experienced an increase in TFP_L and TFP_F following the implementation of the Notice of 11.9 % and 19.6 %.’

8.Graphical Representations: Including more charts and graphs to visually represent the trends and relationships discussed could elevate this paper understanding and readability.

 Overall, the paper is well structured and has significant insight

Thank you for your suggestions, our additions and modifications are listed below:

In order to more visually represent the trend change of TFP in the experimental and control groups before and after the occurrence of the exogenous event, we also present the results of the dynamic trend change in the form of pictures. As shown below, Figures 1 and 2 show the trend changes of TFP_F and TFP_L during the sample period, respectively. The horizontal axis in the two figures indicates the time (year), the vertical axis indicates the TFP, and the dashed and solid lines correspond to the trends of the TFP of the experimental group firms and the control group firms, respectively. In the two figures, it can be seen that the TFP of the two groups of firms in the Notification have roughly the same trend of change. After the publication of the Notice, the upward trend of TFP of enterprises in the experimental group is significantly larger than that of enterprises in the control group.

However, it is clear that the effect of this manipulation can be corroborated with our trend-testing model, and we have previously preferred to retain just the results of the trend test, given the space issue. That is, the regression results of equation (2).

In addition, with reference to the comments of other experts, we have made changes and additions to the article in terms of innovation, practicality of policy recommendations, selection of firm data and description of variables, as shown in the blue font section of the article.

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

The results of the study and the methods used in investigating the impact of a firm's CSR information disclosure on its overall performance allow us to recommend the manuscript for publication.

Several questions that arose in the process of reading the manuscript concern cross-state comparisons of the state of the problem at hand. In addition, it would be interesting to know about the standards of record keeping of a firm's CSR, which would allow us to assess the level of disclosure.

I wish you success in your further research!

Author Response

1.Content and Contribution

The paper investigates the effects of mandatory CSR disclosure on TFP in Chinese companies. This study is of interest and and relevant given the growing emphasis on sustainability and CSR in the corporate governance. The findings that mandatory CSR disclosure provides a positive influence to TFP provides insight within this area.

2.Methodology

The choice of the DID methodology is appropriate given the paper’s focus on the impact of an exogenous regulatory change. The use of panel data covering a substantial sample of firms over a significant period enhances the robustness of the findings my only concern is the time frame chosen.

3.However, the methodology section would benefit from a more detailed discussion on the choice of control variables and the rationale behind the specific years chosen for analysis because there was no reason or justification for this.

Thanks to your suggestion, we have added justification for the use of control variables for this purpose:

In general, the larger the size of a firm, the more resources it has at its disposal, which creates a strong support for R&D activities and the long-term productivity of the firm. In addition, some studies have shown that in terms of the age of the firm's listing may be positively correlated with its innovation awareness [4], and firms with better profits usually have a higher level of competition, so their need for innovation is more pronounced, which has a positive effect on both the firm's TFP. Finally, the shareholding ratio of major shareholders and revenue growth rate of enterprises are related to the management efficiency and growth of enterprises, which will affect the productivity of enterprises to a certain extent [3].

4.Data Set

The data set comprising A-share listed firms from 2006 to 2013 is robust and suitable for the analysis undertaken but  rationale behind the specific years chosen for analysis because there was no reason or justification for this. However, the paper could improve by providing more details about the data sources  The paper should also discuss any potential limitations of the data, the reasons behind missing data for some firms and the selected period of time.

Thank you for your suggestions, our additions and modifications are listed below:

Considering that this paper studies the impact of CSR policy shocks, a traditional DID model is used, which is better able to assess the impact of exogenous shocks relative to an OLS model, but the model requires that the data needs to satisfy a certain degree of symmetry, and therefore the sample time cannot be chosen to deviate too far from the time of the policy release, which makes our data potentially slightly outdated. In the discussion section, we will account for this disadvantage. In addition, the choice of sample time will be explained in a related supplementary note（see: Considering the effectiveness of the exogenous shock of the release of the Notice in 2008, the initial sample of this paper includes all A-share listed companies from 2006 to 2013.）.

In the discussion section, we have added the following:

See:‘Thirdly, in developed countries, voluntary disclosure of CSR information is the norm, while China's CSR process is more backward, so mandatory CSR reports tend to be more reliable than voluntary ones, as reflected in the comprehensiveness, identifiability and horizontal comparability of disclosures. Therefore, studying the impact of mandatory CSR disclosure on firms can better eliminate the interference of noisy information. In addition, the literature has also examined the improvement of CSR disclosure quality from this perspective [3]. Unlike this literature, we cite the traditional DID model, which is a better measure of the impact of policy shocks than the OLS model, although the model requires that our data must satisfy a certain degree of symmetry, i.e., the timing cannot deviate from policy releases too far back in time, which makes our data potentially slightly outdated. In future research, additional robustness tests using multi-period DID or OLS methods can be considered to compensate for the disadvantage of outdated data caused by the traditional DID model.’

5.Clarify Variables: More detailed definitions and justifications for the choice of variables used.

Expand Literature Review: The literature review could be expanded to include more recent studies on mandatory CSR disclosure.

Thanks to your suggestion, we have added justification for the use of control variables for this purpose:

In general, the larger the size of a firm, the more resources it has at its disposal, which creates a strong support for R&D activities and the long-term productivity of the firm. In addition, some studies have shown that in terms of the age of the firm's listing may be positively correlated with its innovation awareness [4], and firms with better profits usually have a higher level of competition, so their need for innovation is more pronounced, which has a positive effect on both the firm's TFP. Finally, the shareholding ratio of major shareholders and revenue growth rate of enterprises are related to the management efficiency and growth of enterprises, which will affect the productivity of enterprises to a certain extent [3].

Secondly, in order to increase the logic of the article and the findings of the latest literature, we have added the following citations and extended the literature review:

1. Escamilla‐Solano, S.; Fernández‐Portillo, A.; Sánchez‐Escobedo, M C, et al. Corporate social responsibility disclosure: Mediating effects of the economic dimension on firm performance. J. Corporate Social Responsibility and Environmental Management. 2024, 31, 709–718.
2. Wang, L.; Li, Y.; Li, X. Corporate social responsibility disclosure, media coverage and financial performance: An empirical analysis in the chinese context. J. The Singapore Economic Review. 2024, 69, 251–268.
3. Liang, X.; Chen X C. Mandatory corporate social responsibility disclosure and financial constraints: Evidence from China. J. International Review of Economics & Finance, 2024, 89: 954-974.

See ‘Moreover, Escamilla‐Solano et al. argued that there is a consensus in the academic community on the improvements brought about by the European Directive in terms of disclosure of CSR actions by companies and the reduction of information asymmetry between the company and its stakeholders [17].’

‘And the good reputation that comes with a well-disclosed CSR report will attract more media coverage, which in turn boosts corporate financial performance [19]. while poorly managed firms may also distract investors by disclosing friendly CSR information to hide management's self-interested activities.’

‘Not only that, Liang and Chen emphasised that the mandatory CSR dis-closure will exacerbate firms’ financial constraints by a plausible channel of controlling shareholder expropriation [21].’

6.Policy Implications: While the paper discusses the policy implications of the findings, a more thorough exploration of how these implications interact with broader economic and regulatory trends in China and globally would provided a wider perspective and value.

Thanks to your suggestion, Considering that China's CSR process is relatively lagging behind, but China's economic volume is increasing day by day, therefore, in the conclusion section, we intend to supplement our conclusions from the perspective of the contribution of China's CSR progress to global environmental and economic sustainability as follows:

(5) As the world's second-largest economy, China's CSR changes have the potential to have a significant impact on global economic sustainability and the development of related regulations, so accelerating China's CSR process is imperative, as it will help the world's major economies to integrate and harmonise their concepts of sustainability, and it will be significant for the future development of the global climate, society, and humanity together.

7.Statistical Significance: Clarifications on statistical significance would improve the transparency and interpretability of the results.

Thanks to your suggestion, we have added a statistical description of the preliminary regression results:

See: ‘The regression outcomes for equation (1) are provided in Table 4. In columns (1) and (2), coefficients for Treated* Post, excluding control variables, are 0.119 and 0.196 respectively, both demonstrating significance at the 1% level and indicating a positive effect. Similarly, in columns (3) and (4), coefficients for Treated* Post with the control variables are 0.139 and 0.206 respectively, also significant at the 1% level, indicating that, relative to the control group, firms in the experimental group experienced an increase in TFP_L and TFP_F following the implementation of the Notice of 11.9 % and 19.6 %.’

8.Graphical Representations: Including more charts and graphs to visually represent the trends and relationships discussed could elevate this paper understanding and readability.

 Overall, the paper is well structured and has significant insight

Thank you for your suggestions, our additions and modifications are listed below:

In order to more visually represent the trend change of TFP in the experimental and control groups before and after the occurrence of the exogenous event, we also present the results of the dynamic trend change in the form of pictures. As shown below, Figures 1 and 2 show the trend changes of TFP_F and TFP_L during the sample period, respectively. The horizontal axis in the two figures indicates the time (year), the vertical axis indicates the TFP, and the dashed and solid lines correspond to the trends of the TFP of the experimental group firms and the control group firms, respectively. In the two figures, it can be seen that the TFP of the two groups of firms in the Notification have roughly the same trend of change. After the publication of the Notice, the upward trend of TFP of enterprises in the experimental group is significantly larger than that of enterprises in the control group.

However, it is clear that the effect of this manipulation can be corroborated with our trend-testing model, and we have previously preferred to retain just the results of the trend test, given the space issue. That is, the regression results of equation (2).

In addition, with reference to the comments of other experts, we have made changes and additions to the article in terms of innovation, practicality of policy recommendations, selection of firm data and description of variables, as shown in the blue font section of the article.

Author Response File: Author Response.pdf

Reviewer 4 Report

Comments and Suggestions for Authors

The article has a clear methodology and logical structure. However, the theoretical and practical contribution of the article is not entirely clear. I would recommend that authors make appropriate emphasis in the introduction and conclusion. What is the scientific novelty? How has the theoretical understanding of the concept of corporate social responsibility been expanded? How to apply the recommendations you proposed in practice? In general, the article represents a holistic study and can be recommended for publication after minor adjustments.

Author Response

The article has a clear methodology and logical structure. However, the theoretical and practical contribution of the article is not entirely clear.

I would recommend that authors make appropriate emphasis in the introduction and conclusion.

1. What is the scientific novelty?

 Thanks to your suggestions, we have added to the discussion session the innovative points and some of the disadvantages of the article as well as the ways it can be improved in the future, the specific changes are as follows:

See ‘Thirdly, in developed countries, voluntary disclosure of CSR information is the norm, while China's CSR process is more backward, so mandatory CSR reports tend to be more reliable than voluntary ones, as reflected in the comprehensiveness, identifiability and horizontal comparability of disclosures. Therefore, studying the impact of mandatory CSR disclosure on firms can better eliminate the interference of noisy information. In addition, the literature has also examined the improvement of CSR disclosure quality from this perspective [3]. Unlike this literature, we cite the traditional DID model, which is a better measure of the impact of policy shocks than the OLS model, although the model requires that our data must satisfy a certain degree of symmetry, i.e., the timing cannot deviate from policy releases too far back in time, which makes our data potentially slightly outdated. In future research, additional robustness tests using multi-period DID or OLS methods can be considered to compensate for the disadvantage of outdated data caused by the traditional DID model.’

2.How has the theoretical understanding of the concept of corporate social responsibility been expanded?

Thank you for your suggestion and our modifications are as follows:

In view of the fact that CSR disclosure in China has its own characteristics, especially the content of the CSR report of the regulated disclosing enterprises, as we further add the relevant detailed disclosure content standards in the main text, so that the readers can better understand the relationship between the implementation of the Circular and the sustainable development of enterprises.

The details are as follows: The Notice requires regulated enterprises to make qualitative or quantitative disclosures in ten areas: shareholder relations, creditor relations, employee relations, supplier relations, customer relations, environmental protection, public relations, philanthropy, CSR policies, working conditions and inadequate CSR performance. The more detailed the disclosure, the higher the quality of the CSR information of the enterprise.

Secondly, in order to increase the logic of the article and the findings of the latest CSR-related literature, we have added the following citations and extended the literature review:

1. Escamilla‐Solano, S.; Fernández‐Portillo, A.; Sánchez‐Escobedo, M C, et al. Corporate social responsibility disclosure: Mediating effects of the economic dimension on firm performance. J. Corporate Social Responsibility and Environmental Management. 2024, 31, 709–718.
2. Wang, L.; Li, Y.; Li, X. Corporate social responsibility disclosure, media coverage and financial performance: An empirical analysis in the chinese context. J. The Singapore Economic Review. 2024, 69, 251–268.
3. Liang, X.; Chen X C. Mandatory corporate social responsibility disclosure and financial constraints: Evidence from China. J. International Review of Economics & Finance, 2024, 89: 954-974.

See ‘Moreover, Escamilla‐Solano et al. argued that there is a consensus in the academic community on the improvements brought about by the European Directive in terms of disclosure of CSR actions by companies and the reduction of information asymmetry between the company and its stakeholders [17].’

‘And the good reputation that comes with a well-disclosed CSR report will attract more media coverage, which in turn boosts corporate financial performance [19]. while poorly managed firms may also distract investors by disclosing friendly CSR information to hide management's self-interested activities.’

‘Not only that, Liang and Chen emphasised that the mandatory CSR dis-closure will exacerbate firms’ financial constraints by a plausible channel of controlling shareholder expropriation [21].’

3.How to apply the recommendations you proposed in practice?

Thank you for your suggestions, and we have added the following elements of the study's findings for possible future use in practice:

See‘(4) The role of CSR disclosure on TFP may be different among firms that are differentiated in terms of property rights and the level of regional financial development. As far as the external environment of the firm is concerned, the government should enhance the level of financial openness in the location of the firm, increase the competition in the banking sector, and thus enhance the level of financial development in the location of the firm. In terms of the internal environment of the enterprise, the enterprise should provide managers with the opportunity to participate in the company's profit-sharing as shareholders, so as to align their interests with those of shareholders and mitigate principal-agent conflicts. Therefore, the government should formulate and implement differentiated CSR policies according to the environment in which the enterprise is located, so as to provide a strong driving force for the enhancement of the enterprise's total factor productivity through the combination of internal and external means, and thus cultivate new quality productivity for the development of the enterprise.’

In addition, with reference to the comments of other experts, we have made changes and additions to the article in terms of innovation, practicality of policy recommendations, selection of firm data and description of variables, as shown in the blue font section of the article.

Author Response File: Author Response.pdf

Reviewer 5 Report

Comments and Suggestions for Authors

The title accurately reflects the central theme of the study, which explores the potential of mandatory CSR disclosure to drive the transformation of enterprises towards high-quality development.

Regarding the overview quality, the paper contributes to scientific literature on CSR and firm performance in the context of China's corporate economic transformation and offers practical implications for promoting high-quality development and sustainable business practices.

Authors may suggest in the conclusion section that companies must prioritize transparency and accountability in their CSR reporting practices. If you sea fit, this can include providing clear and comprehensive disclosures on social and environmental initiatives, as well as establishing robust mechanisms for monitoring and evaluating the effectiveness of CSR programs.

Comments on the Quality of English Language

I did not detect issues with English language

Author Response

1. The title accurately reflects the central theme of the study, which explores the potential of mandatory CSR disclosure to drive the transformation of enterprises towards high-quality development.

Regarding the overview quality, the paper contributes to scientific literature on CSR and firm performance in the context of China's corporate economic transformation and offers practical implications for promoting high-quality development and sustainable business practices.

Authors may suggest in the conclusion section that companies must prioritize transparency and accountability in their CSR reporting practices. If you see fit, this can include providing clear and comprehensive disclosures on social and environmental initiatives, as well as establishing robust mechanisms for monitoring and evaluating the effectiveness of CSR programs.

 Thank you for your suggestion. In order for readers to better understand the relationship between CSR reports and corporate sustainability and the disclosure calibre of related policies, we have firstly supplemented the disclosure content of CSR reports as follows:

In the introduction section, we have added CSR disclosures: ‘The content of the disclosure is closely related to the sustainable development of the enterprise, in particular, the Notice requires the regulated enterprise to make qualitative or quantitative disclosure of information from ten aspects, such as shareholder relations, creditor relations, employee relations, supplier relations, customer relations, environmental protection, public relations, philanthropy, CSR policy, working conditions and inadequate performance of CSR, etc., and the more detailed the disclosure of the content, the higher the quality of the enterprise's CSR information.’

Secondly, we have added a section on accountability mechanisms and transparency of information in the concluding section：

See‘(1) The level of total factor productivity of enterprises determines the trajectory of China's future economic development. In order to better guide enterprises towards the path of high-quality development, the government should strengthen and improve the formulation and implementation of policies on disclosure of CSR information, as well as support relevant accountability mechanisms as early as possible, so as to further promote the transparency and authenticity of the content of CSR disclosure, and thus accelerate the quality transformation of the economy.’

In addition, with reference to the comments of other experts, we have made changes and additions to the article in terms of innovation, practicality of policy recommendations, selection of firm data and description of variables, as shown in the blue font section of the article.

Author Response File: Author Response.pdf

Reviewer 6 Report

Comments and Suggestions for Authors

Thank you for the opportunity to review this article.

It deals with the influence of mandatory CSR disclosure in China on the total factor productivity. The main weakness: the topic has already been researched and published in several articles in recent years (for example https://doi.org/10.3390/su151310110; https://doi.org/10.1080/1331677X.2021.2019596; https://doi.org/10.3390/ijerph19159657; https://doi.org/10.1080/1540496X.2020.1788537, etc.). So, in this regard, the paper doesn't bring additional merit to the scholarship... 

The manuscript is written in a fluent language, and presented in a well-structured manner. The introduction gives a clear explanation of the paper's purpose. 

The literature review does not cover all relevant sources; it is not comprehensive, but it is enough to introduce the reader to the basic concepts and lead to the two hypotheses that have already been tested in the existing papers. 

The chosen methodology is appropriate and robust; the main issue is the sample, taken from the listing of Chinese firms from 2008 through 2013... 

The discussion is quite short; a comparison of findings with extant literature could be introduced, the advantages of mandatory vs voluntary CSR disclosure discussed, etc. So we learn that mandatory CSR disclosure can strengthen firm's TFP by mitigating financing constraints and agency costs

Conclusions are very similar to those in previously mentioned already published papers, so there is not much novelty that the paper brings. 

Comments on the Quality of English Language

The English language is fine. Some minor typos are found in the discussion part (studies have cdeliberated; reached.Some) ...

Authors use different terms for the same concepts, e.g. firms, enterprises, companies, organizations... It would be good to use a unified terminology.

Author Response

1.It deals with the influence of mandatory CSR disclosure in China on the total factor productivity. The main weakness: the topic has already been researched and published in several articles in recent years (for example https://doi.org/10.3390/su151310110; https://doi.org/10.1080/1331677X.2021.2019596; https://doi.org/10.3390/ijerph19159657; https://doi.org/10.1080/1540496X.2020.1788537, etc.). So, in this regard, the paper doesn't bring additional merit to the scholarship...

Thank you for your suggestion, considering that part of the above literature is based on OLS models, which are relevant from the perspective of improvement in the quality of CSR disclosure (Ban and Zhu, 2023). Unlike that literature, we cite the traditional DID model, which is a better measure of the impact of exogenous shocks on firms' behaviour relative to the OLS model. However, the model requires that our data needs to satisfy a certain degree of symmetry, i.e., the timing cannot deviate too far from the time of policy issuance, which makes our data may be slightly outdated, and in the discussion session we will supplement this disadvantage of the article and propose a series of improvement methods.

The specific modifications are designed in the section on recommendations 4 and 5

2.The manuscript is written in a fluent language, and presented in a well-structured manner. The introduction gives a clear explanation of the paper's purpose.

3.The literature review does not cover all relevant sources; it is not comprehensive, but it is enough to introduce the reader to the basic concepts and lead to the two hypotheses that have already been tested in the existing papers.

Thanks to your suggestion, we have added a description of the mandatory CSR report disclosures so that readers can better understand the relevance of the content to corporate sustainability, as described below:

‘The content of the disclosure is closely related to the sustainable development of the enterprise, in particular, the Notice requires the regulated enterprise to make qualitative or quantitative disclosure of information from ten aspects, such as shareholder relations, creditor relations, employee relations, supplier relations, customer relations, environmental protection, public relations, philanthropy, CSR policy, working conditions and inadequate performance of CSR, etc., and the more detailed the disclosure of the content, the higher the quality of the enterprise's CSR information.’

In addition, in the literature review section, we have added the following literature citations to supplement the CSR-related content descriptions:

1. Escamilla‐Solano, S.; Fernández‐Portillo, A.; Sánchez‐Escobedo, M C, et al. Corporate social responsibility disclosure: Mediating effects of the economic dimension on firm performance. J. Corporate Social Responsibility and Environmental Management. 2024, 31, 709–718.
2. Wang, L.; Li, Y.; Li, X. Corporate social responsibility disclosure, media coverage and financial performance: An empirical analysis in the chinese context. J. The Singapore Economic Review. 2024, 69, 251–268.
3. Liang, X.; Chen X C. Mandatory corporate social responsibility disclosure and financial constraints: Evidence from China. J. International Review of Economics & Finance, 2024, 89: 954-974.

See ‘Moreover, Escamilla‐Solano et al. argued that there is a consensus in the academic community on the improvements brought about by the European Directive in terms of disclosure of CSR actions by companies and the reduction of information asymmetry between the company and its stakeholders [17].’

‘And the good reputation that comes with a well-disclosed CSR report will attract more media coverage, which in turn boosts corporate financial performance [19]. while poorly managed firms may also distract investors by disclosing friendly CSR information to hide management's self-interested activities.’

‘Not only that, Liang and Chen emphasised that the mandatory CSR dis-closure will exacerbate firms’ financial constraints by a plausible channel of controlling shareholder expropriation [21].’

4.The chosen methodology is appropriate and robust; the main issue is the sample, taken from the listing of Chinese firms from 2008 through 2013...

Thank you for your suggestions, our additions and modifications are listed below:

Considering that this paper studies the impact of CSR policy shocks, a traditional DID model is used, which is better able to assess the impact of exogenous shocks relative to an OLS model, but the model requires that the data needs to satisfy a certain degree of symmetry, and therefore the sample time cannot be chosen to deviate too far from the time of the policy release, which makes our data potentially slightly outdated. In the discussion section, we will account for this disadvantage. In addition, the choice of sample time will be explained in a related supplementary note（see: Considering the effectiveness of the exogenous shock of the release of the Notice in 2008, the initial sample of this paper includes all A-share listed companies from 2006 to 2013.）.

5.The discussion is quite short; a comparison of findings with extant literature could be introduced, the advantages of mandatory vs voluntary CSR disclosure discussed, etc. So we learn that mandatory CSR disclosure can strengthen firm's TFP by mitigating financing constraints and agency costs

Thank you for your suggestions, our additions and modifications are listed below:

Thirdly, in developed countries, voluntary disclosure of CSR information is the norm, while China's CSR process is more backward, so mandatory CSR reports tend to be more reliable than voluntary ones, as reflected in the comprehensiveness, identifiability and horizontal comparability of disclosures. Therefore, studying the impact of mandatory CSR disclosure on firms can better eliminate the interference of noisy information. In addition, the literature has also examined the improvement of CSR disclosure quality from this perspective [3]. Unlike this literature, we cite the traditional DID model, which is a better measure of the impact of policy shocks than the OLS model, although the model requires that our data must satisfy a certain degree of symmetry, i.e., the timing cannot deviate from policy releases too far back in time, which makes our data potentially slightly outdated. In future research, additional robustness tests using multi-period DID or OLS methods can be considered to compensate for the disadvantage of outdated data caused by the traditional DID model.

 6.Conclusions are very similar to those in previously mentioned already published papers, so there is not much novelty that the paper brings.

Considering that China's CSR process is relatively lagging behind, but China's economic volume is increasing day by day, in the conclusion section, we intend to supplement our conclusions from the perspective of the practical aspects of the findings of this paper and the contribution of China's CSR progress to global environmental and economic sustainability as follows:

(4) The role of CSR disclosure on TFP may be different among firms that are differentiated in terms of property rights and the level of regional financial development. As far as the external environment of the firm is concerned, the government should enhance the level of financial openness in the location of the firm, increase the competition in the banking sector, and thus enhance the level of financial development in the location of the firm. In terms of the internal environment of the enterprise, the enterprise should provide managers with the opportunity to participate in the company's profit-sharing as shareholders, so as to align their interests with those of shareholders and mitigate principal-agent conflicts. Therefore, the government should formulate and implement differentiated CSR policies according to the environment in which the enterprise is located, so as to provide a strong driving force for the enhancement of the enterprise's total factor productivity through the combination of internal and external means, and thus cultivate new quality productivity for the development of the enterprise. (5) As the world's second-largest economy, China's CSR changes have the potential to have a significant impact on global economic sustainability and the development of related regulations, so accelerating China's CSR process is imperative, as it will help the world's major economies to integrate and harmonise their concepts of sustainability, and it will be significant for the future development of the global climate, society, and humanity together.

7.Comments on the Quality of English Language

The English language is fine. Some minor typos are found in the discussion part (studies have cdeliberated; reached.Some) ...

Thank you for your suggestions, our additions and modifications are listed below:

Although many studies have explored the potential impact of CSR disclosure on corporate development, there is no consensus on whether these impacts are all positive or negative. Some studies suggest a potential negative impact of CSR disclosure on companies' operations [2], whereas others have identified a positive association between CSR disclosure and firms' productivity [12].

8.Authors use different terms for the same concepts, e.g. firms, enterprises, companies, organizations... It would be good to use a unified terminology.

Thank you for your suggestions, our additions and modifications are listed below:

We have standardised the use of ‘firm’ to measure the name of the unit

In addition, with reference to the comments of other experts, we have made changes and additions to the article in terms of innovation, practicality of policy recommendations, selection of firm data and description of variables, as shown in the blue font section of the article.

Author Response File: Author Response.pdf

Round 2

Reviewer 6 Report

Comments and Suggestions for Authors

satisfied with the corrections made and given explanations