Corporate Contributions Research Articles

Financial signaling mechanism in investor response to corporate donation disclosure: the moderating role of historical earnings trends

Purpose Corporate donation behavior sends two financial-related signals, i.e. sufficient cash flow and self-confidence in future earnings. This paper aims to investigate whether these financial-related signals released by corporate donation drive investors to make more optimistic forecasts about the firm’s future earnings per share (EPS) and whether this effect varies across different historical earnings trends. Design/methodology/approach This study is based on a controlled online experiment with 553 MBA students. Findings The results demonstrate that a financial signaling mechanism works, but it is moderated by historical earnings trends. When the earnings trend is always increasing, the more the number of financial signals received, the higher the investors’ EPS forecast; when the earnings trend is fluctuating (down then up or up then down), investors’ EPS forecast is higher when they receive financial signal(s) than when they do not, but no additive effect occurs from receiving one signal to two signals; when the earnings trend is always decreasing, investors’ EPS forecast is irrelevant to the number of financial signals received. Originality/value To the best of the authors’ knowledge, this study is the first to experimentally investigate a possible mechanism to explain investors’ positive response to corporate social responsibility (CSR) (specifically, corporate donation) disclosures – the financial signaling mechanism. This study also extends the research on the impact of financial information on investors’ use of nonfinancial information by investigating the moderating role of historical earnings trends on the financial signaling mechanism of the CSR effect.

Corporate philanthropy as a response to greater tax enforcement

I examine whether firms engage in more corporate philanthropy in response to greater tax enforcement. Using the introduction of a new tax administration system as a proxy for increased tax enforcement, I find stricter tax enforcement results in more corporate donations, especially for tax aggressive firms. These results are concentrated in firms that have a greater demand for political connections or firms that have higher potential reputational costs. In summary, this study suggests that firms strategically use corporate philanthropy to respond to increased tax enforcement.

Greenwashing and public demand for government regulation

AbstractEnvironmental governance in many high-income democracies relies to some extent on self-regulation by the private sector. Yet, this policy mode is contested and proponents of top-down government regulation argue that voluntary corporate sustainability commitments remain shallow and rarely are more than greenwashing. I assess to what extent firms’ business conduct is subject to societal checks and balances, in particular, whether public support for regulation constitutes a control mechanism of corporate contributions to environmental goods. I rely on an original survey experiment (N = 2112) conducted with a representative sample of the Swiss voting population. The analysis shows that accusing firms of greenwashing reduces both citizens’ perceived effectiveness of self-regulation and perceived synergy of corporate profits and environmental protection. However, this attitudinal shift only translates into modest updates in respondents’ policy preferences. As a result, short-run shifts in public support for regulation are an unlikely societal control mechanism of business conduct.

Corporate donation behavior during the covid-19 pandemic. A case-study approach in the multinational Inditex

The situation created by the COVID-19 pandemic, especially the confinement in many countries, has led to a global crisis, not only in health but also in economy and social issues. But it has also provoked a wave of solidarity and unprecedented donation behavior by many companies worldwide. Inditex, one of the main fashion multinationals, has become a referent for its reaction speed and has been ranked number one among the most significant companies for its Corporate Social Responsibility during the lockdown. Drawing from Stakeholder, Legitimacy, and Ethics of Care Theories, the aim of this paper is to analyze Inditex as a case study and reflect on the impact of its donation behavior on its corporate reputation. A desk research approach by using secondary data about the corporation, and a content analysis of press releases with ATLASti software during this time, let conclude that effective corporate donation impacts and improves the reputation of the corporation among its stakeholders.

Big food and drink sponsorship of conferences and speakers: a case study of one multinational company's influence over knowledge dissemination and professional engagement.

Research identifies that multinational corporations, including The Coca-Cola Company ('Coca-Cola'), seek to influence public health research and policy through scientific events, such as academic and professional conferences. This study aims to understand how different forms of funding and sponsorship impact the relationship between Coca-Cola, academic institutions, public health organisations, academics and researchers. The study was conducted using Freedom of Information (FOI) requests and systematic website searches. Data were collected by twenty-two FOI requests to institutions in the USA and UK, resulting in the disclosure of 11 488 pages, including emails and attachments relating to 239 events between 2009 and 2018. We used the Wayback Machine to review historical website data to evaluate evidence from 151 available official conference websites. N/A. Documents suggest that Coca-Cola provides direct financial support to institutions and organisations hosting events in exchange for benefits, including influence over proceedings. Coca-Cola also provided direct financial support to speakers and researchers, sometimes conditional on media interviews. Also, indirect financial support passed through Coca-Cola-financed non-profits. Often, such financial support was not readily identifiable, and third-party involvement further concealed Coca-Cola funding. Coca-Cola exerts direct influence on academic institutions and organisations that convene major public health conferences and events. These events offer Coca-Cola a vehicle for its messaging and amplifying viewpoints favourable to Coca-Cola's interests. Such corporate-sponsored events should be viewed as instruments of industry marketing. Stronger rules and safeguards are needed to prevent hidden industry influence, such as complete disclosure of all corporate contributions for public health conferences and their speakers.

The Effectiveness of Cause-Related Marketing: A Meta-Analysis on Consumer Responses

Cause-related marketing (CM), which links corporate donations to consumer purchases, has ongoing momentum in marketing. As the magnitude and direction of consumers’ response to CM are inconclusive, this meta-analysis synthesizes evidence on main and moderator effects from 237 studies. On average, the authors find a moderate effect for attitudinal response (d = .458) and a weak effect for behavioral response (d = .283; both ps < .001), both with high underlying heterogeneity. A multivariate meta-regression on CM moderators grounded along four conceptual pillars—transparency, signals of sincerity, purchase context, and consumers’ emotional attachment to CM—shows that attitudinal effects hinge mostly on emotional attachment. Suboptimal execution and poor communication of the donation appeal in particular can even have detrimental effects on attitudes. In addition, various moderators from other pillars play a relevant role. For behavioral outcomes, both emotional attachment and signals of sincerity are equally important. The visual prominence of the donation is the most relevant individual moderator, with only a few others related to the two pillars following at some distance. Therefore, CM requires different priorities depending on corporate objectives. This research further compares the effects of CM with those of discounts and other corporate social responsibility marketing instruments, simulates practical examples, and provides avenues for further research.

Political connection, family ownership and corporate philanthropy: empirical evidence from Jordan

PurposeA key goal of this research is to examine empirically whether politically connected board members are likely to impact corporate philanthropy. A further goal of this study is to contribute to the existing literature by examining the moderating role of political connections on the relationship between family ownership and corporate donations.Design/methodology/approachBased on the content analysis approach, the authors determined the level of cash and in-kind donations made by a group of 94 non-financial Jordanian companies listed on the Amman Stock Exchange. This study examined 658 annual reports spanning over seven years from 2010 to 2016. Ordinary least squares regression (OLS) is used to test the study hypotheses. In addition, this study used the probit regression to validate those results reported by the OLS regression.FindingsCompared to unconnected companies, politically connected companies in Jordan are more likely to donate to philanthropic causes. Moreover, the results revealed that the presence of significant family ownership shareholding in a firm can weaken the firm tendency to donate. Despite this, the regression analysis results indicate that family-controlled firms with political connections are more likely to engage in charitable giving activities compared to those without political nexuses.Research limitations/implicationsThe study contributes to the conversation surrounding corporate giving and sheds light on the role political connections and ownership structure (particularly family-owned firms) play in affecting donations by firms.Practical implicationsManagers of Jordanian firms listed on the stock exchange can use the study's findings to make better decisions about their donations and other philanthropic activities.Originality/valueThis study is the first to examine the relationship between firm donations and political connections in Jordan, and how political nexuses can moderate the relationship between family ownership and corporate donations. Hence, it extends prior research significantly.

Enhance or inhibit? Unveiling the influence of chairman's hometown attachment on the corporate philanthropy-Corporate financial performance relationship.

Although there have been numerous studies on the relationship between corporate philanthropy and corporate financial performance (CFP), theoretical analysis focusing on the legitimacy-based mechanism and the moderating role of key executives' psychological characteristics is scarce. Hometown attachment is a special form of place attachment in environmental psychology, which reflects people's psychological attachment to their hometown and the state of maintaining an intimate emotional connection with it. Based on Scott's three-pillar institutional perspective, this study traces its origins from the Chinese cultural context, and discusses the legitimacy basis of donations in the Chinese cultural context and why donations can improve CFP. On this basis, the moderating effect of the chairman's hometown attachment on the corporate donation-performance relationship is empirically tested. Through logical deduction, hometown attachment may form legitimacy pressure to weaken the above relationship or leverage more legitimacy resources to strengthen such a relationship. Which effect dominates? The empirical results in this study of A-share listed firms from 2009 to 2018 show that the moderating role of hometown attachment is more in line with the resource theory than the former pressure theory. Further research shows that the government and consumers are important providers of these legitimacy resources. This study reveals the mechanism for legitimacy acquisition through corporate donations in the Chinese context and answers the question of what the chairman's hometown attachment brings about to their donation performance, providing some inspiration for practice.

Framing Accountability in Business-to-Government Data Sharing: The Gap Filling Role of Businesses’ Corporate Digital Responsibility

This study questions the accountability gap in business-to-government data sharing: if most European policy efforts are being devoted to the objective of unlocking private datasets for the “public good” under the EU Strategy for data, less attention has been given to the subsequent moment of the performance and execution of business-togovernment data sharing agreements in a transparent and accountable manner to the public that should benefit from these. Given the accountability gaps left open by both public and the data protection regulations in the context of business-to-government data sharing, the analysis focuses on the notion of corporate digital responsibility as a gap-filler between public law-based and data protection-law based accountability models. The consideration of the specific problem of businesses’ accountability in B2G data sharing enables to contextualise the debate on the possible contribution of corporations to welfare objectives in the digital economy. Data sharing, accountability, corporate social responsibility, public interest, data protection, B2G, transparency, IP, Data Act, Corporate digital responsibility

Looking good by doing good: CEO attractiveness and corporate philanthropy

We investigate the effect of male corporate managers' physical appearance—classified into unattractive, average-looking, and attractive—on the philanthropic decisions of Chinese listed firms. We find that compared to average-looking managers, those who rated as attractive do not engage more actively in corporate donations. On the contrary, the probability of donating is approximately 5% higher for unattractive managers than for average-looking managers; further, unattractive managers donate 95% more in charitable giving. To explain these findings, we propose a psychological channel through which physical appearance may influence male managers' charitable donations: Because altruistic behaviors may aggrandize individuals, managers conscious of deficits in their own physical attractiveness may engage in prosocial behavior to increase their attractiveness in the eyes of others. We find consistent evidence that the effect of managers' unattractiveness on philanthropic decisions is stronger in firms with weaker corporate governance; further, we find that the positive impact of corporate donation on financial performance observed in firms led by attractive and average-looking managers is substantially weaker in those firms led by unattractive managers.

Firm Characteristics and Corporate Donations of Oil and Gas Sector in Nigeria

Firm Characteristics and Corporate Donations of Oil and Gas Sector in Nigeria

Will auditors charge more for corporate philanthropy? Evidence from China

AbstractThis study examines the relationship between corporate philanthropy (CP) and audit fees. Using corporate donation data from China, our investigation finds that CP is significantly positively associated with audit fees. Resource‐seeking purpose and the enhanced publicity effect may be plausible channels behind this relationship. We further find that the frequency and intensity of donations reinforce this positive association. Additional analysis reveals that the resource‐seeking effect exists in any type of enterprise, while the enhanced publicity effect only exists in non‐SOEs. Our main results remain robust to a battery of additional tests. Overall, our findings suggest that by increasing audit workload and prospective audit risk, CP could make auditors more conservative such that they charge a higher audit fee. This article emphasizes the dialectic institutional stakeholder perspective in understanding the economic consequences of CP. Both the theoretical contributions and practical implications of these findings are discussed.

To Give or Not to Give? The Influence of Board Giving on Nonprofit External Donations

Many nonprofits encourage or require their boards to give, using board giving as a signal of governance commitment to boost external donations. However, nonprofit boards are uncertain about whether their giving really is necessary and effective for improving external fundraising. This exploratory study uses a longitudinal sample and draws on signaling theory and the crowding-in hypothesis to predict whether, and under what conditions, board giving leads to external donations for arts-related nonprofits. The results indicate a positive relationship between board giving and nonprofit external donations. Moreover, the results show that the positive effect of board giving is more pronounced in commercial nonprofits and that corporate donors react to board giving more positively than foundation and individual donors. These results suggest that the use of board giving as a fundraising strategy would be the most effective when commercial, arts-related nonprofits ask corporate donors for donations.

$ over Ethics: Higher Education and the Private Prions Industry, a Symptom of the Theology of Neoliberalism.

Neoliberalism’s impact on our everyday lives, culture, and institutions is powerful and ubiquitous. One might suspect that higher education, especially non-profit colleges and universities, would be less affected and more resistant to the expansion of market-driven logic and the hyper-capitalist ethos of neoliberalism, but much evidence points to college and university subscription to the tenants of this ideology and practice. This is especially the case as state policy leaders, particularly conservative and neoconservative Republicans, are aggressively disinvesting in higher education, reducing or removing completely governmental responsibility to ensure an educated population in favor of market-driven forces. While we provide a brief overview of the corporatized universities of today and its problematic nature, we focus on the impact of corporate donations on universities, with particular attention to the private prison industry’s intertwinement with higher education, and specifically the relationship between the GEO Group and Florida Atlantic University.

IMPLEMENTATION OF IT BALANCED SCORECARD AND COBIT 5 FRAMEWORK IN IT GOVERNANCE MANAGEMENT IN THE LIFE INSURANCE INDUSTRY

There are several methods that can be used in evaluating the management of IT Governance in a business organization. Some of them are able to use the IT Balanced Scorecard and COBIT 5.0 framework. The Information Technology Balanced Scorecard has four perspectives, including corporate contribution, customer orientation, operational excellence and future orientation. With the implementation of the IT Balance Scorecard, the performance of business organizations such as life insurance companies is not only measured by the financial benefits, as has often been done, but also considers internal processes. In addition, the implementation of the COBIT 5.0 framework provides a comprehensive framework that helps companies achieve their goals for IT Governance. The purpose of the results of this study is a strategic recommendation for companies to be able to provide improvements in the governance and management environment of information technology in the company as one of the enablers in achieving business goals during the Covid-19 pandemic. The results of the IT governance design are in the form of a roadmap for the implementation of IT governance along with recommendations for 25 COBIT 5 processes which are the evaluation points based on the prioritization of the combination of impact and urgency.

Social value of a Canadian urban food bank garden

The Garden Patch—an urban agriculture program of the Saskatoon Food Bank & Learning Centre (SFBLC)—relies on corporate and individual donations in a time of growing austerity. The SFBLC does an excellent job of communicating programs to donors, but they had not previously completed a return-on-investment analysis. A social return on investment evaluation study for the 2018 growing season provided guidance on the most significant impact of the organization’s strategic objectives and provided an additional tool to communicate the program’s value to donors and the community. This work indicates the monetary value of social benefits gained from the investments made to the SFBLC for its urban agriculture program. Data sources included harvest data, volunteer logs, budget, and workshop attendance; key informant interviews with community members, volunteers, and staff; and community-based telephone and online surveys. It also included in-person surveys with community members accessing food hampers. With feedback from stakeholders, we measured the most valued program outcomes. The inputs and resources to run the Garden Patch were valued at CA$96,474 in 2018.[1] The outputs were vegetables for food hampers, gardening skills, physical and psychological health, and work and educational experiences. Outcomes were valued using financial proxies. For each outcome, the deadweight, attribution, and displacement were considered and discounted to calculate the impact value of $155,419. The final calculation is expressed as a ratio of present value divided by the value of inputs. We conservatively estimate a $1.61 of social value created for every dollar invested in the Garden Patch. We also analyze this method in the context of the current societal neoliberal paradigm, recognizing that there is much work to be done to advance food security and social justice.

Customer concentration and corporate charitable donations: Evidence from China

This study examines the impact of customer concentration on corporate charitable donations. Drawing on stakeholder and resource dependency theories, we argue that when firms rely on a small set of customers for a significant proportion of sales revenue, they will reduce corporate charitable donations. State ownership and industry competition moderate this relationship. Using data on corporate donations from Chinese listed firms between 2009 and 2019, we find support for our hypotheses. Our study contributes to the literature on customer concentration and corporate philanthropy in emerging economies.

A self-interested gesture? Corporate charitable giving in response to government fiscal pressure

PurposeThis study examines whether and how government fiscal pressure influences corporate charitable giving (CCG).Design/methodology/approachThe authors exploit sub-national tax revenue sharing changes as exogenous variations to government’s fiscal pressure at the city level and then construct a quasi difference-in-differences (DiD) model to conduct the analysis based on a sample that consists of 14,168 firm-year observations in China during the period of 2003 to 2012.FindingsThe authors found that firms increase charitable donations when local governments face higher fiscal pressure. Such effects are more pronounced for firms that have stronger demand for political connectedness in the sample period. Furthermore, this study’s findings suggest that the timing strategy of donating helps firms to lower the effective tax rate and to build stronger political connections. In addition, donating firms outperform non-donating firms in terms of bank loan access and market reputation.Originality/valueThe authors contribute to at least three lines of literature: first, extend the understanding of timing strategies of corporate charitable behaviors; second, contribute to the literature studying the “crowd out” effect between government-provided charitable funds and private donations; finally, contribute to the emerging literature exploring the financial interests associated with corporate donation strategy (Claessens et al., 2008; Cull et al., 2015).

The effect of corporate donation motive attribution on investors' judgments of future earnings prospects: The moderating role of individual moral orientation

AbstractWe experimentally investigate whether donation motive attribution influences individual investors' judgments of the donating firm's future earnings prospects and whether individual moral orientation, that is, perceived importance of social goodwill (PISG), moderates this effect. We find that investors forecast higher future earnings per share (EPS) when the donation motive is believed to be altruistic or win–win rather than egoistic; the EPS forecasts for altruistic and win–win motives are not different. However, this motive attribution effect holds only for higher‐PISG investors. A further examination finds that when the donation motive is believed to be egoistic and/or when investors have lower PISG, doing good is no better than doing nothing, but no backfire effect occurs. Our findings indicate that the positive effect of corporate donation on investors' judgments is generated only when higher‐PISG investors believe that the donation motive is not purely egoistic; corporate donation will not generate negative effects on investors' judgments even under less favorable conditions.

Corporate philanthropic response to the COVID-19 pandemic in China: a dilemma?

PurposeThis study aims to examine the corporate donations in response to the intensive outbreak of the COVID-19 pandemic in China in 2020 and proposes that the local spread of COVID-19 is negatively associated with corporate donations due to the non-trivial costs, but meanwhile, strong institutional pressures based on institutional theory are put on firms to donate, which thus creates a dilemma for firms. This study further argues that the dilemma is heterogeneous across different institutional fields.Design/methodology/approachUsing a sample of Chinese listed companies during the intensive outbreak of this pandemic, a two-stage Heckman selection model is conducted to address the potential sample selection bias.FindingsThis study reveals a negative relationship between the local spread of COVID-19 and corporate donations, confirms the driving effect of various types of institutional pressure and finds that the intensity of the COVID-19 pandemic strengthens the effect of coercive pressure and mimetic pressure on philanthropic giving but weakens the effect of normative pressure.Originality/valueThis study extends the knowledge on firms’ philanthropic response to natural crises, as the COVID-19 pandemic has not only led to a public health crisis but also to a global economic crisis, and how the effects of institutional pressures are affected by a situational crisis. This work enriches the literature on corporate philanthropy and crisis management and has some implications for both policymakers and business practitioners.