The effect of political influence on corporate social donations: Evidence from party-building reform in China

Abstract

As a new exploration of corporate governance in China's non-state-owned enterprises (NSOEs), the effect of "Party Building into Articles of Association" (PBAA) in the decision-making of NSOEs has not yet been verified. Based on hand-collected data on PBAA in NSOEs, this paper investigates the impact and constraints of PBAA on decision-making in NSOEs by using the external event of corporate donations during the COVID-19 pandemic. The results show that PBAA has embedded the party organization into the corporate governance system of NSOEs, affecting the decision-making of NSOEs effectively, thus boosting the social donations of NSOEs during the epidemic period. Meanwhile, the extent of PBAA is constrained by the original level of corporate governance and entrepreneurial identification. These findings remain robust after controlling for possible endogeneity issues. In addition, further research suggests that the more detailed the content of PBAA is, the higher the probability of substantial donations in epidemic situations in NSOEs.