Digital communications between firms and investors: Impact of explanatory responses on investor engagement in online financial Q&A

The emerging trend of digital communications between firms and investors through online question-and-answer (Q&A) platforms is recognized as a vital strategy for managing investor relations, contributing to enhanced market efficiency and information transparency through increased information exchange. Potential investors can seek responses from firm managers to address their information needs, thereby mitigating market uncertainties. To provide foundational insights, we conduct a survey of investors to assess their awareness, usage, and perceptions of firm-investor Q&A platforms. In the subsequent empirical study, we specifically focus on the substance of managers’ responses, which are primarily aimed at clarifying firm events or information. In terms of linguistic properties, our attention is directed toward the use of causal explanations within managers’ responses on investor interactive platforms. Through an examination of user-generated content, i.e., Q&A pairs on the investor interactive platform, we discern a positive correlation between the use of causal language in managerial responses and subsequent investor engagement in firm-investor Q&A communications. In addition, we highlight the role of negation words and response relevance, two language attributes indicating the diagnosticity and informativeness of responses in corporate communication efforts. These findings contribute to a more profound understanding of online communications between firms and potential investors, emphasizing their significance in the management of investor relations. The insights gained offer valuable implications for both firm managers and regulatory entities.