This study investigates how firms strategically differentiate their Corporate Social Responsibility (CSR) reports, a key form of CSR communication, and its impact on capital market outcomes. Utilising a unique dataset of 2,145 CSR reports from S&P 500 companies (2016-2021), we employ advanced textual topic modelling and image processing techniques to examine CSR reporting distinctiveness, a nuanced CSR communication strategy, and market reaction. Our findings reveal that CSR communication differentiation, in both textual and visual elements, negatively impacts analyst recommendations. However, this negative effect is mitigated by firms’ overall strategic conformity, which signals adherence to industry conventions. Our study contributes to the CSR communication, signalling theory, and optimal distinctiveness literature by providing insights into the complex interplay between differentiation and conformity in driving stakeholder perceptions. We highlight the importance of balancing distinctive CSR communication with industry norms to optimise analyst and investor responses. These findings offer implications for managers in designing effective CSR communication strategies that align with stakeholder expectations while maintaining a unique corporate identity.
