Do Strategic Orientations and CSR Disclosures Affect Investment Efficiency? Evidence from Textual Analysis in Emerging Markets

Abstract

<p>This study explores how firms’ strategic orientations—operational efficiency, customer intimacy, and product innovation—along with corporate social responsibility (CSR) disclosure, influence investment efficiency in emerging markets. Using 1594 firm-year observations from companies listed on the Tehran Stock Exchange (TSE) between 2015 and 2024, we combine quantitative analysis with textual evidence from Management Discussion and Analysis (MD&A) reports. The findings show that operational efficiency and customer intimacy are generally linked to lower investment efficiency, reflecting possible resource misallocation and short-term priorities. In contrast, product innovation has a more nuanced impact: it improves investment efficiency in R&D-intensive sectors and during stable economic periods. CSR disclosure is also negatively associated with investment efficiency, suggesting that while CSR reporting enhances legitimacy and stakeholder trust, it may shift managerial attention and resources away from core investments. Robustness checks—including firm fixed effects, alternative keyword dictionaries, placebo tests, and endogeneity controls—support these results. Additional sub-sample analyses indicate that strategic orientations and CSR disclosure also function as channels of financial innovation: operational efficiency fosters disciplined resource allocation, product innovation supports sustainable growth, and customer intimacy strengthens transparency and stakeholder engagement.<br></p>