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This paper aims to examine the differences in investors’ reactions toward firms’ corporate social responsibility (CSR)-related news announcements between individuals and institutions.

Analyzed by the short-term event study and ordinary least squares (OLS) methods using a unique CSR data set collected from newspapers in Japan from 2001 to 2016.

The study finds, first, the different reactions toward CSR-related news announcements among shareholders. Second, the findings indicate that individual investors are more sensitive to CSR-related positive news, whereas institutional investors are more concerned about the negative news, providing one of the reasons for mixed results in the studies on the CSR and financial performance linkage. Those findings indicate that CSR-related news affects investors’ behaviors differently based on their purpose, ability and accessible information.

This study deepens the understanding of the different investing behaviors toward CSR-related announcements by shareholder type. Second, different attitudes among investors require different investor relations (IR) approaches depending on the type. It also provides valuable implications not only for Japanese business managers or policymakers but also for those from countries with a similar stage of market maturity in the CSR context.

This paper is original in two ways. First, to the best of the author’s knowledge, this is the first paper to deepen the understanding of investors’ reactions toward CSR-related events through analysis by the main shareholder, which provides some insights into mixed results in the previous studies. Second, the original CSR data set collected from newspapers by the author allows the analysis to use a larger data set than other research, resulting in more robust conclusions.