Do investors listen? Exploring the effect of investor relationship management on firm-specific stock return variation

In this study, we combine the National Investor Relations Institute Index of Marketization of China's Provinces 2016 report with Nankai University's investor relationship management index to examine the influence of investor relationship management on firm-specific stock return variation. Our results indicate a significant positive relationship between a firm's investor relationship management and the magnitude of firm-specific return variation in its stock. Our results further show that the relationship varies across different regions in China due to differences in the institutional environment. Specifically, firms in regions with a high level of marketization, a high degree of rule of law, and a low degree of government intervention exhibit a stronger relationship. These results provide important implications for policy makers and corporate managers and help enhance corporate governance and firm valuation.