Does Shared Institutional Equity Enhance Corporate Eco-Transparency Reporting? Evidence from Firm Life Cycles Stages

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

This manuscript investigates whether shared institutional equity (SIE) enhances corporate eco-transparency reporting (ETR), particularly across different firm life cycle stages, using Chinese listed companies as a case study. The primary research question explores how SIE influences ETR and its variations during various stages of corporate development. I hope the authors find the suggestions valuable in enhancing the overall quality and rigor of the manuscript.

1.        Introduction Section:

a.        Research Problem: The introduction needs a clearer articulation of the research problem. The current framing of SIE's role in promoting ETR is too general. Specify the gaps in prior studies on SIE and ETR, and how this study uniquely contributes to addressing these gaps.

b.        Research Motivation: Emphasize the practical significance of investigating SIE in the context of China’s environmental challenges. Discuss why understanding ETR through SIE is critical for stakeholders, including policymakers, institutional investors, and corporate management.

2.        Theoretical Grounding:

a.        The integration of Stakeholder Theory and Legitimacy Theory is underdeveloped. Elaborate on how these theories intersect and complement each other in the context of SIE and ETR.

b.        Address critical perspectives of both theories:

                                                                i.      Stakeholder Theory: Discuss criticisms such as its overemphasis on increasing shareholder wealth, potentially leading to unethical practices.

                                                              ii.      Legitimacy Theory: Acknowledge criticisms regarding the symbolic representation of corporate legitimacy rather than substantive transparency. This omission undermines the discussion of SIE's role in enhancing public trust.

3.        Hypothesis Development:

a.        The hypotheses are framed too broadly and lack alignment with the variables. Ground them in specific theoretical constructs and empirical evidence to enhance their relevance and clarity.

4.        Literature Review:

a.        Expand the discussion of the relationship between tax incentives and intellectual capital, as this is a well-researched domain. Clearly position this study relative to the existing literature to highlight its novelty.

b.        Critically review the rich literature on institutional capital in China (Baig et al., 2022; Liu et al., 2018; Shahzad et al., 2021) and their contribution to corporate growth and transparency, integrating these insights to strengthen the paper’s positioning.

5.        Empirical Analysis:

1.        The use of OLS regression is questionable without discussing its appropriateness. Conduct diagnostic tests (e.g., BIC values) to confirm the model’s fit, as highlighted by current studies., https://doi.org/10.1080/10438599.2021.1908896; https://doi.org/10.1177/15480518241288329

a.        Adopt a one-period lag approach in regression analysis.

b.        Consider employing a mixed-effects regression model, which may better capture unobserved heterogeneity and account for the panel data structure.

c.         For Hypothesis 2, include a comparative box plot to present the mean analysis of shared institutional equity holdings across firm life cycle stages. Refer to Dong et al., (2024), for embedding effect sizes in visual presentations.

6.        Discussion Section:

a.        The discussion is missing. Move the interpretations from the results section into a new discussion section.

b.        Discuss the theoretical and policy implications of the findings. For instance, how does SIE influence ETR practices across different firm stages, and what insights can policymakers and corporate managers draw from this?

7.        General Observations:

a.        The manuscript should discuss the potential implications of greenwashing under SIE-driven ETR practices, as this is a recurring issue in environmental disclosure.

b.        Enhance readability by organizing findings under clear subheadings. This will improve the logical flow and comprehension of the manuscript.

The manuscript has a strong foundation and addresses a timely and relevant topic. However, significant revisions are needed in theory development, hypothesis framing, and empirical methodology to meet publication standards. With these improvements, the study could make a valuable contribution to the literature on corporate governance and sustainability.

Comments on the Quality of English Language

 English could be improved to more clearly express the research.

Author Response

 

Author/s/ response to REVIEWER#1 comments

This manuscript investigates whether shared institutional equity (SIE) enhances corporate eco-transparency reporting (ETR), particularly across different firm life cycle stages, using Chinese listed companies as a case study. The primary research question explores how SIE influences ETR and its variations during various stages of corporate development. I hope the authors find the suggestions valuable in enhancing the overall quality and rigor of the manuscript.

1. Introduction Section:
2. Research Problem:The introduction needs a clearer articulation of the research problem. The current framing of SIE's role in promoting ETR is too general. Specify the gaps in prior studies on SIE and ETR, and how this study uniquely contributes to addressing these gaps.

            Author/s/ response: In response to your thoughtful observations, we have thoroughly revised the introduction section to address the concerns you raised. Specifically, we have enhanced the presentation of the research problem and the literature gap. These revisions can be found from pages 64 to 116. In this section, we have segregated the literature into financial literature and non-financial literature on SIE. Additionally, we have provided evidence highlighting where traditional literature exists and clearly defined the research problems. These revisions aim to elucidate the existing gaps and demonstrate how our study contributes to addressing them.

1. Research Motivation:Emphasize the practical significance of investigating SIE in the context of China’s environmental challenges. Discuss why understanding ETR through SIE is critical for stakeholders, including policymakers, institutional investors, and corporate management.

            Author/s/ response: To address this, we have revised the introduction further, explicitly outlining the motivation for our study. These updates are reflected between lines 39 to 47 and elaborated from lines 49 to 59. We believe these changes clearly articulate the relevance and expectations of our research, particularly in relation to the unique regulatory and corporate dynamics within China.

            We hope these revisions adequately address your concerns and strengthen the overall quality of our manuscript.

2. Theoretical Grounding:
3. The integration of Stakeholder Theoryand Legitimacy Theory is underdeveloped. Elaborate on how these theories intersect and complement each other in the context of SIE and ETR.
4. Address critical perspectives of both theories:
5. Stakeholder Theory: Discuss criticisms such as its overemphasis on increasing shareholder wealth, potentially leading to unethical practices.
6. Legitimacy Theory: Acknowledge criticisms regarding the symbolic representation of corporate legitimacy rather than substantive transparency. This omission undermines the discussion of SIE's role in enhancing public trust.

            Author/s/ response: We acknowledge that the initial submission of our manuscript lacked a clear integration of the practical framework. Based on your suggestion regarding the need for a more cohesive, we have undertaken significant revisions. Specifically, we have revised both the theoretical frameworks in two key sections of the manuscript:

1. Introduction:
   In this section, we have integrated stakeholder theory and corporate legitimacy theory to strengthen our argument. This integration can be found in the introduction (lines 82 to 117). These revisions establish a robust theoretical foundation for our study, aligning our proposed arguments with these two complementary frameworks.
2. Theoretical framework (Subsection 3.1: Eco-transparency reporting: Legitimacy theory and stake holder theory)

We have extensively revised subsection 3.1 to provide a critical examination of corporate legitimacy and stakeholder protection. In this revised section, we highlight criticisms and provide evidence to connect these points with the core arguments of our study. These changes aim to address the theoretical concerns you raised and propose a well-structured foundation for our research.

            Furthermore, in Subsection 3.2, we have articulated and refined our study’s research questions. We believe that these updates, particularly the integration of theoretical criticisms and evidence, adequately fulfill your expectations regarding the radical restructuring of our manuscript.

3. Hypothesis Development:
4. The hypotheses are framed too broadly and lack alignment with the variables. Ground them in specific theoretical constructs and empirical evidence to enhance their relevance and clarity.

            Author/s/ response: As per your observations, we have made significant revisions to the hypothesis development section. Initially, we had presented H1 as a split hypothesis (H1A), reflecting both the positive and negative perspectives of shared institutional equity holders' role in influencing corporate eco-transparency reporting. While this approach explored both the collaborative and adversarial governance roles of shared institutional equity, we recognized, based on the feedback of Reviewer 2 (Point 2), the need for a more unified and streamlined hypothesis.

Consequently, we revised H1 to a single, cohesive hypothesis:

            H1: Ceteris paribus, shared institutional equity positively influences the quality of corporate eco-transparency reporting

            This hypothesis is now supported by an integrated discussion that balances the collaborative and adversarial roles of shared institutional equity holders. This discussion has been explicitly cited and expanded upon in Subsection 3.2, lines 347 to 412, where we provide a comprehensive rationale supported by theoretical insights and empirical references.

            Further, we also revised our subsequent hypotheses to enhance their relevance and clarity H2, we now compare the impact of firm lifecycle stages, focusing on the introduction and growth stages, to assess how these early phases influence corporate eco-transparency reporting and revised H2 as follows:

            H2: Compared to the introductory and growth stages, the impact of shared institutional equity on eco-transparency reporting is more pronounced in the growth stage

            Further, H3 hypothesis examines the effects during the mature and decline stages of the firm lifecycle, allowing for a comprehensive analysis of lifecycle dynamics.

            H3: Compared to the maturity and decline stages, the impact of shared institutional equity on eco-transparency reporting is more pronounced in the maturity stage

            These revisions reflect a more structured approach, offering distinct yet interconnected hypotheses that align with the theoretical framework and empirical evidence. We have also incorporated insights from the readings you recommended, which were instrumental in refining our arguments and building a robust hypothesis development section.

            The revised hypothesis development section now provides a clearer and more coherent progression of arguments, ensuring that each hypothesis is logically derived and empirically grounded.

4. Literature Review:
5. Expand the discussion of the relationship between tax incentives and intellectual capital, as this is a well-researched domain. Clearly position this study relative to the existing literature to highlight its novelty.

            Author/s/ response: We sincerely appreciate your insightful comments and suggestions regarding the literature review. While we understand the reviewer's mention of tax incentives and intellectual capital as areas of potential relevance, we would like to clarify that our study specifically focuses on shared institutional equity and environmental transparency reporting. These topics are distinct from the specific scenario and objectives of our research.

            However, we have revised our literature review to include and cite the suggested studies, enriching the discussion of institutional capital in the Chinese context.

1. Critically review the rich literature on institutional capital in China (Baig et al., 2022; Liu et al., 2018; Shahzad et al., 2021) and their contribution to corporate growth and transparency, integrating these insights to strengthen the paper’s positioning.

            Author/s/ response: In response to your suggestion to enhance the literature review from the perspective of institutional capital in China, we conducted an extensive search to identify relevant studies. While we encountered some challenges in locating the exact references you mentioned, we identified two pertinent studies: (Baig et al., 2022 and Shahzad et al., 2021) which provide meaningful insights into this area.

            These studies have been incorporated into the revised literature review section, specifically in lines 182–185 and lines 185–188, where we have contextualized their findings to align with our research objectives. By integrating these references, we have enriched the discussion on institutional capital and its implications within the Chinese context.

5. Empirical Analysis:
6. The use of OLS regression is questionable without discussing its appropriateness. Conduct diagnostic tests (e.g., BIC values) to confirm the model’s fit, as highlighted by current studies., https://doi.org/10.1080/10438599.2021.1908896; https://doi.org/10.1177/15480518241288329

            Author/s/ response: To assess the model fitness, we have reported the F-statistic value and the Adjusted R-squared in our baseline Table 5. These statistics indicate the model's explanatory power, with the Adjusted R-squared reflecting the proportion of variance explained by the independent variables while accounting for model complexity. The F-statistic further confirms the overall significance of the model.

1. Adopt a one-period lag approach in regression analysis.

            Author/s/ response: Following your valuable suggestion, we have applied the one-year lag regression model to better account for the temporal effects in our analysis. The details of this approach and its implementation are explained in Section 5.6.1 and the results of the one-year lag regression are presented in Table 9. We are grateful for your insightful observation, which has significantly contributed to refining our methodology

1. Consider employing a mixed-effects regression model, which may better capture unobserved heterogeneity and account for the panel data structure.

            Author/s/ response:  In response to your suggestion, we have implemented fixed effects to address these concerns. Specifically, we have fixed our results with respect to time-invariant factors by controlling for the year and the industry fixed effects are incorporated in all of our regression models, from the baseline to the 2SLS, to ensure robustness. This approach allows us to better capture unobserved heterogeneity, and we have highlighted this in the analysis tables to enhance the accuracy of our findings and address potential concerns raised by panel tests.

1. For Hypothesis 2, include a comparative box plot to present the mean analysis of shared institutional equity holdings across firm life cycle stages. Refer to Dong et al., (2024), for embedding effect sizes in visual presentations.

            Author/s/ response:  In response to your comment, we followed the suggested studies, including those by Shahzad et al. (2021) and Shahzad et al. (2023), to present the box plot of SIE across the different stages of the firm life cycle in figure 1. This approach aligns with their methodologies and provides a visual representation of how SIE behaves during the various phases of the life cycle. For a detailed explanation of the findings, please refer to (pages 602-606) of the results section.

6. Discussion Section:
7. The discussion is missing. Move the interpretations from the results section into a new discussion section.

            Author/s/ response:  Based on the empirical findings and the insights from the current study, we have inserted a new subsection Result and discussion in Section 5.8, which can be found on lines 810-834. We believe that this revised research discussion clearly strengthens the reader's understanding of the results and effectively addresses your expectations.

1. Discuss the theoretical and policy implications of the findings. For instance, how does SIE influence ETR practices across different firm stages, and what insights can policymakers and corporate managers draw from this?

            Author/s/ response:  During the revision process, we have carefully revised the conclusion section to better emphasize the critical and policy implications of our study, which can be seen on lines 853 to 886. We have specifically highlighted the implications arising from the findings related to the role of SIE in shaping ETR practices.

7. General Observations:
8. The manuscript should discuss the potential implications of greenwashing under SIE-driven ETR practices, as this is a recurring issue in environmental disclosure.

            Author/s/ response:  At that point, we have merged these aspects and explicitly mentioned the adverse role of SIE in the hypothesis section (3.2). This revision ensures that the connection between SIE and its impact on corporate behavior, particularly in the context of greenwashing, is clearly articulated. This addition strengthens the logical flow of the paper and ensures alignment between the theoretical framework and empirical findings.

1. Enhance readability by organizing findings under clear subheadings. This will improve the logical flow and comprehension of the manuscript.

            Author/s/ response:  We have made significant improvements to the structure and formatting of the paper. The overall structure has been reorganized to ensure a smoother logical flow of the arguments and to improve the clarity of the research findings. We have made sure that each section is well-structured, with clearer subheadings and a more consistent formatting style throughout.

The manuscript has a strong foundation and addresses a timely and relevant topic. However, significant revisions are needed in theory development, hypothesis framing, and empirical methodology to meet publication standards. With these improvements, the study could make a valuable contribution to the literature on corporate governance and sustainability.

            Author/s/ response:  All authors would like to express their sincere appreciation to the reviewer for the thoughtful observations and valuable feedback provided during the review process. The suggestions provided were instrumental in refining our arguments, enhancing the structure and presentation, and ultimately strengthening the overall quality of the paper. We believe that the revisions made based on your feedback have greatly improved the manuscript, and we are grateful for your insightful contribution to this work.

 

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

The authors examine the relationship between shared institutional equity and eco-transparency reporting. The rationale of the study has been well explained, along with relevant contributions.

It does not make much sense to have two hypotheses (null and alternative) outlined in the report. When the null has been outlined, the alternative hypothesis is clear. This discussion must be corrected and provided in a single section.

Conversely, H2 can be separated into H2 and H3, because it includes two separate levels of impact on reporting. The discussion should be amended accordingly.

When determining the 1st and 99th percentile, were outliers excluded or set to the 1st and 99th percentile values?

The authors refer to Appendix A1, but this is not included in the report.

The scope and scale of the analysis are impressive, but the discussion is very limited. The general findings and implications for management/firms should be discussed in more detail. Theoretical and practical implications should be in the previous discussion section, not among the concluding remarks.

 Some editing may be beneficial  “The FLC of a firms…”, 

Author Response

Author/s/ response to REVIEWER#2 comments

The authors examine the relationship between shared institutional equity and eco-transparency reporting. The rationale of the study has been well explained, along with relevant contributions.

            Author/s/ response:  We have carefully addressed all of your comments and made the necessary revisions. These changes have significantly enhanced the clarity and overall quality of the manuscript, and we believe they will contribute to a better understanding of the study.

It does not make much sense to have two hypotheses (null and alternative) outlined in the report. When the null has been outlined, the alternative hypothesis is clear. This discussion must be corrected and provided in a single section.

            Author/s/ response:  We acknowledge your observation and in line with your suggestion, we have revised Hypothesis (H1) and Hypothesis A (H1A) accordingly. The revised H1 now reads:

            H1: Ceteris paribus, shared institutional equity positively influences the quality of corporate eco-transparency reporting

            We have incorporated both theoretical and empirical evidence concerning the dual roles of SIE both adverse and collaborative towards ETR. Additionally, we have revised the Hypothesis development section, specifically from lines 337 to 403, to reflect these updates.

Conversely, H2 can be separated into H2 and H3, because it includes two separate levels of impact on reporting. The discussion should be amended accordingly.

            Author/s/ response:  Considering the impact of  SIE on  ETR across different stages of the firm life cycle, we have split our original Hypothesis H2 into two distinct hypotheses: H2 and H3.

            H2: Compared to the introductory and growth stages, the impact of shared institutional equity on eco-transparency reporting is more pronounced in the growth stage

            Further, H3 hypothesis examines the effects during the mature and decline stages of the firm lifecycle, allowing for a comprehensive analysis of lifecycle dynamics.

            H3: Compared to the maturity and decline stages, the impact of shared institutional equity on eco-transparency reporting is more pronounced in the maturity stage

            This revision strengthens the hypothesis and provides more clarity in our analysis. Additionally, we have amended the discussion and conclusion sections, particularly in section 5.8, to reflect these changes. We believe these revisions improve the overall coherence and depth of the analysis.

When determining the 1st and 99th percentile, were outliers excluded or set to the 1st and 99th percentile values?

            Author/s/ response:  Thank you for your observation. To mitigate the influence of outliers on the empirical results, we adjusted all continuous variables by restricting them to the 1st and 99th percentiles (See 477-479). This approach ensures that extreme values beyond these percentiles are capped at the respective threshold values, rather than being excluded entirely

The authors refer to Appendix A1, but this is not included in the report.

            Author/s/ response:  Thank you for your comment. We have incorporated your suggestion and have inserted the relevant appendix A1 in the revised manuscript

The scope and scale of the analysis are impressive, but the discussion is very limited. The general findings and implications for management/firms should be discussed in more detail. Theoretical and practical implications should be in the previous discussion section, not among the concluding remarks.

            Author/s/ response:  We have carefully revised the results and discussion sections, ensuring a clearer structure and more comprehensive analysis. In particular, we have integrated the theoretical and practical implications immediately following the discussion section (now Section 5.9), which provides a clearer link between our findings.

            Additionally, we have updated the conclusion section to more accurately reflect the study's conclusions and limitations (now Section 6 and 6.1). These amendments have significantly improved the clarity and coherence of our study, making the connections between the research findings, practical implications, and study limitations more transparent and easily accessible. We believe these changes will contribute to a more comprehensive understanding of our work.

 Some editing may be beneficial  “The FLC of a firms…”,

            Author/s/ response:  We have revised the acronym for the "firm life cycle stage" to now be consistently reflected as FLCS throughout the manuscript. Additionally, we have updated and ensured the correct usage of this acronym in all relevant sections to maintain clarity and consistency across the paper.

 

 

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

This paper investigates the impact of Shared Institutional Equity (SIE) holders on Ecological Transparency Reporting (ETR). The research results indicate that companies with higher levels of SIE are more likely to disclose ETR; Internal control within a company is an intermediary factor that enables SIE to enhance ETR. There are significant differences in the impact of SIE on ETR at different stages of the enterprise lifecycle. The positive impact of SIE is most evident in the growth and maturity stages, during which companies are better equipped to prioritize ecological transparency initiatives. In contrast, companies in the introduction and decline stages may not fully utilize SIE to strengthen their reporting practices. This article establishes a positive correlation between SIE and ETR, surpassing traditional ownership theory and providing a more detailed understanding of the relationship between ownership and disclosure practices.

I would like to ask if the author has considered whether there are differences in the impact of SIE on ETR across different industries, especially the differences in the impact of different life cycles？Will the conclusions of this article change during periods of economic boom and recession？

Author Response

Author/s/ response to REVIEWER#3 comments

 

This paper investigates the impact of Shared Institutional Equity (SIE) holders on Ecological Transparency Reporting (ETR). The research results indicate that companies with higher levels of SIE are more likely to disclose ETR; Internal control within a company is an intermediary factor that enables SIE to enhance ETR. There are significant differences in the impact of SIE on ETR at different stages of the enterprise lifecycle. The positive impact of SIE is most evident in the growth and maturity stages, during which companies are better equipped to prioritize ecological transparency initiatives. In contrast, companies in the introduction and decline stages may not fully utilize SIE to strengthen their reporting practices. This article establishes a positive correlation between SIE and ETR, surpassing traditional ownership theory and providing a more detailed understanding of the relationship between ownership and disclosure practices.

Author/s/ response:  We would like to express our sincere gratitude for your insightful comments and suggestions. We have carefully addressed all of your comments and made the necessary revisions. These changes have significantly enhanced the clarity and overall quality of the manuscript, and we believe they will contribute to a better understanding of the study.

I would like to ask if the author has considered whether there are differences in the impact of SIE on ETR across different industries, especially the differences in the impact of different life cycles？Will the conclusions of this article change during periods of economic boom and recession？

            Author/s/ response:  Thank you for your insightful comment. In response to your query regarding the potential influence of industry-specific factors and differences in the firm lifecycle. To account for industry-specific effects and time-invariant factors, we have fixed the year and industry variables in all of our regression models. This adjustment ensures that any industry-related influences are controlled for, providing a clearer analysis of the relationships under examination. Additionally, we have fixed the industry and year variables in our subsequent hypotheses (H2 and H3) across all four panels in table 6.

            Regarding your question about the economic recession, our main sample includes data from the years 2009 to 2022. Reports suggest that China did not experience a formal recession during this period. As such, we believe that the rules governing the economy remained consistent throughout this timeframe, and the potential impact of a recession on our analysis is minimal.

 

Author Response File: Author Response.pdf

Reviewer 4 Report

Comments and Suggestions for Authors

This is a very good article that provides some future direction on research on the effects of institutional shareholders on sustainability reporting. Dividing the sample by life-cycle stage was a very wise decision.

My two minor criticisms:

1. There is a neglected interaction between the heterogeneity of institutional investors and firm-life-cycle that could explain the results. For example Dickinson et al (2018) find that the information set that institutional investors pay attention to changes over the firm life-cycle and Filatochev et al (2006) find that corporate governance practices also change over firm life-cycle. That is to say, I'm not entirely convinced that in your regressions, you would have been better off treating life-cycle as an endogenous variable and using some sort of GMM estimator.

2.  In you 2SLS-IV, you choose to use the industry mean of shared institutional equity as your instrumental variable. I'm OK with that. Did you test how good of an instrumental variable it is?

Filatotchev, I., Toms, S., & Wright, M. (2006). The firm's strategic dynamics and corporate governance life‐cycle. International Journal of Managerial Finance, 2(4), 256-279.

Dickinson, V., Kassa, H., & Schaberl, P. D. (2018). What information matters to investors at different stages of a firm's life cycle?. Advances in Accounting, 42, 22-33.

 

Author Response

Author/s/ response to REVIEWER#4 comments

This is a very good article that provides some future direction on research on the effects of institutional shareholders on sustainability reporting. Dividing the sample by life-cycle stage was a very wise decision.

My two minor criticisms:

1. There is a neglected interaction between the heterogeneity of institutional investors and firm-life-cycle that could explain the results. For example Dickinson et al (2018) find that the information set that institutional investors pay attention to changes over the firm life-cycle and Filatochev et al (2006) find that corporate governance practices also change over firm life-cycle. That is to say, I'm not entirely convinced that in your regressions, you would have been better off treating life-cycle as an endogenous variable and using some sort of GMM estimator.

            Author/s/ response:  Thank you for your valuable feedback. We acknowledge the importance of considering the interaction between the heterogeneity of institutional investors and the firm life cycle in explaining the results.

            To address this concern, we performed additional analyses, including an approach and GMM regressions, to account for the potential endogeneity of the firm life cycle. These methodologies ensure that our results are robust to such concerns and provide more reliable estimates. The details of the methodology and the underlying rationale are discussed in Section 5.7.2, while the empirical findings from these analyses are presented in Table 13.

            These results further substantiate our primary findings, confirming the robustness of our conclusions and the significance of the mechanisms identified in the study.

2. In you 2SLS-IV, you choose to use the industry mean of shared institutional equity as your instrumental variable. I'm OK with that. Did you test how good of an instrumental variable it is?

            Author/s/ response:  Thank you for your feedback and for noting the appropriateness of our choice of the industry mean of shared institutional equity as an instrumental variable in the 2SLS-IV analysis.

            We tested the strength and validity of the selected instrument to ensure its reliability. Specifically, the reported F-statistic in Table 14, Panel A, demonstrates that the instrument is strong, meeting the commonly accepted thresholds (e.g., the Stock and Yogo criteria) for avoiding weak instrument bias. This solidifies the reliability of our chosen instrumental variable.

Filatotchev, I., Toms, S., & Wright, M. (2006). The firm's strategic dynamics and corporate governance life‐cycle. International Journal of Managerial Finance, 2(4), 256-279.

Dickinson, V., Kassa, H., & Schaberl, P. D. (2018). What information matters to investors at different stages of a firm's life cycle?. Advances in Accounting, 42, 22-33.

            Author/s/ response:  Thank you for your insightful suggestion. The recommended readings, particularly Dickinson et al. (2018) and Filatochev et al. (2006), have been carefully reviewed and integrated into the body of the paper. These works provided valuable perspectives on the dynamic interplay between institutional investors and firm life-cycle stages, enriching our analysis and interpretation.

 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

I have no further comments. However, the authors have carefully addressed all the feedback that was provided. 

Comments on the Quality of English Language

The English could be improved to more clearly express the research.