This paper extracts investor risk concern from the text of investormanagement communications and examines their impact on insider opportunistic sales. Utilizing data from listed companies holding online earnings communication conferences (OECCs) in China from 2007 to 2022, we find that heightened investor risk concern significantly curbs insider opportunistic sales, as manifested by reduced frequency and magnitude of such transactions. This governance effect of investor risk concern persists irrespective of motivation strength behind opportunistic sales. Further analysis reveals that the governance effect intensifies when investors exhibit superior information processing capabilities and when management’s risk statements better align with investor expectations. Notably, while mitigating opportunistic sales, elevated investor risk concern also significantly decreases the firm’s cost of equity capital. Our findings underscore the importance of fostering transparent and engaging investor-management communication in promoting effective corporate governance and mitigating insider misconduct.

We examine the impact of firm-investor communication on ESG issues through investor interactive platforms in Chinese stock exchanges from 2010 to 2022. Our regression analysis finds that increased ESG-based questions from investors and firms’ responses lead to increased stock liquidity, suggesting that investor-firm dialogues beyond financial aspects to include ESG-related themes contribute to greater information transparency. We posit that investors use such communication as a “voice” strategy, advocating firms for enhanced ESG disclosures and performance. This strategy yields a two-fold benefit: it aligns with investors’ ESG objectives and, alternatively, facilitates their exit through improved stock liquidity. Our robustness tests suggest a probable causal relationship between investor engagement on ESG issues and stock liquidity. Moreover, we find that a positive tone in ESG-based communications strengthens this relationship, prompting managers to enhance ESG disclosure transparency in response to investor pressure.

This study examines the effect of retail investor-firm communications (RIFC) on corporate ESG performance. Exploiting the unique setting of Chinese investor interactive platforms which enable retail investors to pose questions and require firm answers, we show that RIFC significantly improves corporate ESG performance. The consistent evidence is obtained by employing the difference-indifference estimation, Oster’s test and alternative indictors, strengthening our confidence in the causal link between RIFC and corporate ESG performance. Furthermore, we identify two potential economic channels underlying our results: strengthening monitoring pressure and alleviating financial constraints. Our finding further reveals that RIFC drives genuine improvements in ESG performance rather than greenwashing practices. Collectively, this study advances our understanding of the interplay between retail investors and corporate ESG performance, providing a stepping stone toward effective solutions to corporate sustainable development.

Minority shareholder activism (MSA) on online interactive platforms is a new form of corporate governance in China. This paper investigates whether and how dividend-related MSA affects corporate dividend policies. We find listed firms are more likely to pay dividends and raise payout ratios with MSA. Our baseline findings are robust to a variety of robustness checks. We establish a causal relationship between MSA and future dividend payouts, with both instrumental variable approach and PSM-DID approach, and we provide evidence to show the increasing effect of MSA can be explained by exit threat and voting attendance. Our focused MSA complements the formal voting rights of minority shareholders and overcomes the absence of institutional investor monitoring. Overall, our findings suggest that minority shareholders can effectively monitor management when they are empowered with voice in the age of information.

Retail investors are rising in prominence but have historically been granted little direct access to question corporate management relative to professionals like sell-side analysts and institutional investors. Because retail investors are relatively less sophisticated and can require hand-holding, we examine whether information asymmetry among investors decreases when firms answer questions from the retail investor base. We exploit ’s investor interactive platforms (IIPs), which were designed to facilitate retail investor access to management. IIPs allow questions to be anonymously and publicly posted, but answers can only pertain to previously disclosed information and there is no explicit penalty for low-quality answers. We find that IIP answers reduce bid-ask spreads, with stronger answer effects when managers respond quickly, provide direct answers, and interact with IIP users who focus on the firm. These information asymmetry reduction benefits are substantially attenuated, and in some cases non-existent, for state-owned enterprises (SOEs), who have less incentive to publicly engage with retail investors. Finally, our findings reveal that on average the marginal effects of answers are smaller than for posted questions, suggesting that while firms benefit from answering questions to lower investor integration costs, IIP activity that lowers awareness and acquisition costs is also important.

Using novel data from a stock forum, we analyze return extrapolation in the cross-section. Our findings indicate that extrapolators overreact to the returns but underreact to the fundamentals. The post-earnings-announcement drift (PEAD) is more pronounced among firms with a high firm-level degree-of-extrapolation (DOX). Additionally, investors ask fewer questions about high-DOX firms’ fundamental information on official online interactive platforms. Extrapolation reduces the informativeness of stocks due to investors’ inattention to fundamentals. Furthermore, extrapolators’ overreaction to returns and underreaction to fundamentals increase stock price crash risks. These findings support explanations of extrapolation based on limited asymmetric attention.