On Peer Effects of Corporate Philanthropy: A Study Based on Board Networks

Abstract

Peer behavior is a key factor affecting corporate philanthropy. Based on social embeddedness theory, this paper studies the peer effect of corporate philanthropy from a perspective of board network embedded. It arrives at the following conclusions: firstly, when enterprises embed themselves in the board networks, philanthropy behavior among connected enterprises has significant peer effect; secondly, corporate philanthropy affected by the peer effect provides convenience for self-interest of the management, namely the management in state-owned enterprises enjoys higher non-monetary benefits and the one in non-state-owned enterprises enjoys higher monetary benefits; thirdly, corporate philanthropy affected by the peer effect does not lead to the increase in government subsidies but results in the significant improvement of enterprise performance. Therefore, enterprises should treat board networks rationally, selectively learn from and imitate charitable donations of connected enterprises, to avoid that the loss outweighs the gain.