Environmental regulations and charitable donations made by polluting companies: Evidence from China

Abstract

Using a quasi-natural experiment on the adjustment of sulfur dioxide emission levy standards by provinces in China from 2007 to 2014, we apply a difference-in-differences method to examine how stricter environmental regulations affect charitable donations made by polluting companies. Empirical results show that the increase in pollution levy standards increases corporate donations by 0.505%, implying that polluting companies use charitable donations as a strategic action to address the negative impact of environmental penalties. We also find that the political connection, local environmental governance preference, public image and corporate social responsibility strategies significantly affect the relationship between environmental regulations and donations of polluters.