"Slack Resource, Political Tie and Corporate Philanthropy: Evidence from Chinese Private Corporates"

Abstract

In recent years, Chinese private firms have become an important driving force in promoting the development of philanthropy in China. This paper examines the possible effect of slack resource and political tie in Chinese private firms on corporate charitable donation. Based on the resource dependence theory and social exchange theory, it was hypothesized that slack resource, political tie and the interaction between these two factors would exert positive effects on the amount of corporate charitable donation. Second-hand data from Chinese private listed enterprises were collected, and the empirical results suggest that the relationships are complicated, suggesting that different sorts of slack resources and political ties will exert different effects on corporate charitable donation. Moreover, the interaction of slack resource and political tie exerts a significantly negative effect on corporate charitable donation, in contrast with the hypothesis and common intuition. Possible explanations of these relationships are explored and theoretical and practical implications of this research, as well as the directions for future study, are discussed.