Corporate Philanthropic Activities Research Articles

Enhancing Corporate Philanthropy Through Board Competency and Financial Health: Accelerating Progress Towards Sustainable

Objective: This study aims to examine the effect of board competency and financial health on corporate philanthropic activities in achieving SDGs. Theoretical Framework: The stakeholder theory stands out as providing a solid basis for understanding the context of philanthropic activities aimed at promoting Good Health and Well-Being (SDG 3), Quality Education (SDG4), Reduced Inequalities (SDG 10), and Climate Action (SDG13). Method: The population consists of 1,023 listed firms from 2018 – 2023. After excluding insufficient data on donation, the final sample consists of 391 firm-year observations. Results and Discussion: We found that board competency plays a significant role in the investment in philanthropic activities. Besides that, firms with higher profitability increase their investment in donations, and there is a tendency for firms to mask their solvency through donation activities to attract future investors. Research Implications: This research's practical and theoretical implications are discussed, providing insights into how the results can be applied or influence practices in philanthropy. Our study provides valuable insights for firms and stakeholders on the stability of the firms, which is crucial to determining the total philanthropic investment among firms. Originality/Value: This study is unique in that it examines the firm’s financial health concerning philanthropic charity donations.

Touched by Quakes: Mortality Salience and Corporate Philanthropy

ABSTRACT This study examines how natural catastrophes affect corporate philanthropic activities in China. Firms located in areas experiencing severe seismic losses increase charitable donations. The effect is stronger when firms demonstrate stronger social responsibility, operate in higher-mortality regions, and are led by female or elder CEOs, supporting the mortality salience hypothesis. We address endogeneity issues with an instrumental variable and a propensity score matching approaches. Furthermore, firms with higher charitable donations experience a more positive stock market reaction around the 2008 Wenchuan Earthquake. Overall, our findings suggest that natural catastrophes amplify financial market participants’ mortality salience and affect their economic decisions.

Political connections and firms’ trade credit in emerging economies

PurposeTrade credit is an important business-to-business marketing tool for building firms’ competitive advantage. Many studies explore the determinants of trade credits from a trust-based view, but the role of political connections is largely overlooked, despite their potential influence in assessing firms’ trustworthiness in the context of emerging economies. This study aims to fill this gap by examining how political connections affect the capacity of emerging economy firms (EEFs) to grant and receive trade credit.Design/methodology/approachThis study tests a conceptual model using secondary data collected from 1,149 Chinese privately owned listed manufacturing firms between 2008 and 2016.FindingsThis study finds that political connections reduce EEFs’ accounts receivable and payable; their philanthropic activities alleviate this negative effect for accounts payable, while patent applications reduce it for accounts receivable. These findings suggest the effect of political connections can spillover to EEFs’ relationship with their up- and down-stream partners.Practical implicationsThis study has implications EEF managers, particularly in pointing to the detrimental effect of political connections on relationships with buyers and suppliers, and highlights the need to adopt suitable approaches to offset this effect.Originality/valueThis study sheds new light on the negative effect of political connections on EEFs’ capacity to grant and receive trade credit in their exchanges with up-stream and down-stream partners. It enriches the trust-based view of trade credit by revealing the significant influence of EEFs’ political connections, while also advancing a contingency view by testing the moderating role of corporate philanthropic activities and patent applications.

Social Assistance by Corporations in Pandemic Era: Between Obligations or Culture?

Gotong royong is the cultural root of Indonesian society. The attitude of gotong royong is manifested in togetherness and kinship as integration of Indonesian people. The Pandemic of the new coronavirus has extensively tested the course of gotong royong values. In the context of corporate’s philanthropy activities, it aims to provide social benefits, the current trend shows there is a new corporate philanthropy paradigm, namely strategic philanthropy that can provide social benefits while increasing long-term profits such as spread the existence of the product name, and foster partnerships between business units. This study analyze the trends, motives, and moral directions of the corporate's philanthropic activities after introducing pandemic restrictions on national culture (gotong royong). The research method used in this research is normative with a conceptual approach. This study uses secondary data through primary legal materials and secondary legal materials. The data collected will be analyzed using a qualitative approach and stated descriptively. The final results of those research that there are a considerable effect of corporate morality strongly influences the motives and motivation of corporations in carrying out social activities. Corporate morale is influenced by stakeholder backgrounds, goals, and corporates business strategies. So in order to maintain the unity and stability of the corporations and the surrounding community, multi-stakeholder collaboration with the principle of gotong royong through national clusters to overcome the impact of the COVID-19 Pandemic is urgently needed.

Impact of expenditures and corporate philanthropy disclosure on company value

PurposeThe paper aims to estimate how corporate philanthropy expenditures and corporate philanthropy disclosure (in general and in different spheres) affect investment attractiveness of Russian companies.Design/methodology/approachTo assess the degree of corporate philanthropy disclosure the authors compiled lexicons based on a set of techniques: text and frequency analysis, correlations, principal component analysis. To adjust the existing classifications of corporate philanthropic activities to the Russian market the authors employed expert analysis. The empirical research base includes 83 Russian publicly traded companies for the period 2013–2019. To estimate the impact of indicators of corporate philanthropy disclosure on company's investment attractiveness the authors utilized panel data regression and random forest algorithm.FindingsWe compiled 2 Russian lexicons: one on general issues of corporate philanthropy and another one on philanthropic activities in various spheres (sports and healthcare; support for certain groups of people; social infrastructure; children protection and youth policy; culture, education and science). 2. The paper observes that the disclosure of non-financial data including that related to general issues of corporate philanthropy as well as to different spheres affects the market capitalization of the largest Russian companies. The results of regression analysis suggest that disclosure of altruism-driven philanthropic activities (such as corporate philanthropy in the sphere of culture, education and science) has a lesser impact on company's investment attractiveness than that of activities driven by business-related motives (sports and healthcare, children protection and youth policy).Research limitations/implicationsOur findings are important to management, investors, financial analysts, regulators and various agencies providing guidance on corporate governance and sustainability reporting. However, the authors acknowledge that the research results may lack generalizability due to the sample covering a single national context. Researchers are encouraged to test the proposed approach further on other countries' data by using the authors’ compiled lexicons.Originality/valueThe study aims to expand the domains of signaling and agency theories. First, this subject has not been widely examined in terms of emerging markets, the authors’ study is the first to focus on the Russian market. Secondly, the majority of scholars use text analysis to examine not only the impact of charitable donations but also the effect of corporate philanthropy disclosure. Thirdly, the authors provided the authors’ own lexicon of corporate philanthropy disclosure based on machine learning technique and expert analysis. Fourthly, to estimate the impact of corporate philanthropy on company's investment attractiveness the authors used the original approach based on combination of linear (regression), and non-linear methods (permutation importance. The authors’ findings extend the theoretical concept of Peterson et al. (2021): corporate philanthropy is viewed as the company strategy to reinforce its reputation, it helps to establish more efficient relationships with stakeholders which, in its turn, results in the increased business value.

Family CEO successor and firm performance: The moderating role of sustainable HRM practices and corporate philanthropy

AbstractWe develop and test a multi‐stakeholder perspective of intrafamily CEO succession by exploring how family CEO successors affect post‐succession firm performance under conditions of sustainable human resource management (sustainable HRM) practices toward employees and top managers, as well as corporate philanthropic activities in the broader community. Using a sample of 414 CEO successions in family firms listed on China's stock exchanges during 2008–2016, we find an insurance‐like effect of both sustainable HRM and corporate philanthropy in enhancing firm performance of family CEO successors. Our results also show that firms with family CEO successors will outperform those with nonfamily counterparts under conditions of high employee compensation, low top management team (TMT) compensation, and long TMT tenure. Our findings suggest that sustainable HRM and corporate philanthropy complement rather than substitute in strengthening family leadership during CEO succession.

Private benefits of corporate philanthropy and distortions to corporate financing and investment decisions

AbstractResearch Question/IssueThis study examines whether private benefits of control, as measured by corporate philanthropic activities, distort corporate financing and investment decisions.Research Findings/InsightsWe find that corporate giving represents a private benefit of control that distorts corporate investment and financing activity, consistent with free cash flow agency theory. Corporate giving discourages managers from pursuing external financing, especially debt issuance, to minimize outside monitoring. It creates preferences for internally financed cash acquisitions for the same reason. These distortions reduce shareholder wealth. Following both the 2003 dividend tax cut and hedge fund activism, corporate charitable contributions fall while investment rises, suggesting suboptimal investment caused by managerial private benefit extraction. Acquisition announcements of firms making large charitable contributions show negative stock market reactions that are more pronounced for acquirers with poor corporate governance.Theoretical/Academic ImplicationsOur findings suggest that due to agency problems and managerial rent extraction, corporate philanthropic activities can distort corporate financing and investment decisions and yield corporate charitable contribution allocations that personally benefit a firm's CEO at shareholder expense.Practitioner/Policy ImplicationsAs corporate philanthropy imposes a significant cost to shareholders, managers may seek shareholder approval on corporate philanthropic activities. The Securities and Exchange Commission may also require timely disclosure of corporate donations.

Can CEOs’ Facial Attractiveness Influence Philanthropic Behavior? Evidence from India

ABSTRACTThis study extends the extant literature on corporate philanthropy by exploring the indirect effect of physical attractiveness of CEOs on corporate philanthropy under conditional effects of family ownership and control. Recent empirical studies in psychology suggest that egalitarian values are negatively related to physical attractiveness. Based on these findings, we propose that physically attractive CEOs invest less in corporate philanthropic activities than less attractive peers as they have lower egalitarian values. Leveraging upper echelons and stewardship theory, we further consider the moderating impact of family ownership and control on the indirect relationship between the physical attractiveness of a CEO and philanthropy mediated through egalitarianism.

Institutional drivers for corporate philanthropic activities in China: Mediating roles of top management participation

AbstractOn the basis of institutional theory and upper echelon perspective, this study develops and tests an integrative model that links institutional pressures to corporate philanthropy through the top management. Specifically, the mediating influences of top management participation and the moderating roles of resource availability and regulatory control in these relationships are investigated. Results of a survey of 207 Chinese firms suggest that coercive, mimetic, and normative pressures are significantly related to top management participation. Top management participation has a significant mediating effect on the relationship among coercive, normative, and corporate philanthropic activities. Furthermore, results indicate that resource availability positively moderates the relationships between institutional pressures and corporate philanthropic activities, whereas regulatory control negatively moderates these relationships. The theoretical and managerial implications of this study are discussed.

A Study on the Effects of Corporate Philanthropic Activities on the intention to pay Price Premium and Continued Purchase Intention

A Study on the Effects of Corporate Philanthropic Activities on the intention to pay Price Premium and Continued Purchase Intention

Promoting Corporate Philanthropic Efforts through Social Media

Corporations face the challenge of creating awareness of corporate social responsibility (CSR) efforts while avoiding the appearance of being overly self-congratulatory or self-serving. The low cost and less obtrusive format of social media may make it a useful communication option for creating awareness of philanthropic activities. Content analysis was used to examine how three types of social media (Facebook, Twitter, and YouTube) were used to provide information on corporate philanthropic activities. Forty corporations from the Fortune 100 were sampled to address three research questions. The first two research questions pertained to the availability of social media tools and the specific locations of access to those tools. Results revealed 82.5% of the 40 corporations provided links to at least one social media platform and 22 provided at least one type of link to at least one type of philanthropic activity. The third research question examined how social media platforms were used to report the eight types of philanthropy identified by Kotler and Lee (2005). In all, 140 philanthropic activities were reported. The most frequently reported types of philanthropic activity included donating cash (n = 72, 51.40%), donating products (n = 27, 19.30%), donating services (n = 15, 10.71%), offering grants (n = 13, 9.29%), and awarding scholarships (n = 5, 5.71%). Other types of philanthropy were infrequent. Results suggest these social media platforms offer a viable option for brief reports of philanthropic activities.

Relational Pluralism and Practice Variation

explanations deriving from network positions, ignoring the multiplicity of networks that the organization is embedded in, heterogeneity in institutional backdrop of network partners and possible costs of maintaining network ties. The purpose of this study is to explore the implications of the key idea that not only the organizations are embedded in multiple networks, but also these networks themselves are institutional contexts. Focusing on the variation in corporate philanthropic activities of all banks in Turkey for the period of 2008-2012, this study explores; (1) how inter-organizational networks influence organizational preferences, (2) the strategies organizations use to deal with network multiplicity and (3) the performance implications of different philanthropic portfolio compositions. This study uses a unique dataset of over 2,600 philanthropic projects. Multilevel models are used to test the hypothesis. The findings suggest that network membership homogenizes practices; organizational level filters moderate this influence, when faced with network multiplicity, organizations diversify their portfolios and in corporate philanthropy, generalists outperform specialists. This study contributes to recent attempts on how institutional and networks perspectives can complement each other to present an alternative view to more traditional, monolithic representation of workings of networks. This study also contributes to research on corporate philanthropy to show the antecedents and consequences of corporate philanthropic portfolios.

Board of directors and industry determinants of corporate philanthropy

Purpose– The purpose of this paper is to extend the current research on corporate philanthropy and organizational outcomes by empirically exploring two specific types of antecedents: board of director composition and industry membership.Design/methodology/approach– A theoretical framework was developed based on the resource dependence and stakeholder theories which suggest that the extent that firms build relationship with certain stakeholders is closely tied to the personal and social background of board members, in turn influencing the allocation of resources to corporate philanthropy. Hierarchical multiple regression analysis as well as analysis of variance withpost hoccomparisons was conducted using multi-year data philanthropic data from 104 US corporations.Findings– The results provided empirical support for a positive relationship between the number of female board directors and the level of corporate philanthropy. In addition, the results showed significant inter-industry variations in the level of corporate philanthropy. This indicated that the rather aggressive role of philanthropy in mitigating reputational challenges associated with product-market dysfunctions. Contrary to the theoretical predictions, the results did not support a positive relationship between the proportion of outside directors and level of philanthropy.Research limitations/implications– The authors believe the empirical finding on the relationship between industry membership and corporate philanthropy is a significant contribution to the philanthropy literature. Accordingly, by empirically showing the disproportionately higher level of philanthropy by some prominent industries (such as gas and oil, financial services and chemical) than their counterparts, the authors contribute to the understanding of sector-level determinants of corporate philanthropy.Practical implications– Since board of directors have a direct involvement in reviewing and approving major corporate initiatives, the choice of these directors is more likely to influence the amount of resources committed to philanthropic causes. Consistent with other studies in the larger corporate social responsibility research, the authors found that more women directors on the board are associated with greater philanthropic spending. Hence, a major implication of the study is that shareholders and the general corporate community need to pay close attention into who is elected to serve as director of business organizations as these directors’ background and experience could shape major social responsibility initiatives such as corporate philanthropy.Originality/value– By empirically investigating the relationship between board composition and philanthropy, this study extends the scholarly discussion to focus on the role of the board in shaping the level of firm commitment in overall CSR. In addition, this study provides empirical evidence on the role of industry context in the level of commitment in corporate philanthropic activities.

An analysis of restrictive mechanisms on director behavior regarding corporate philanthropy in China

Purpose Currently, in China, the governance structure of modern companies gives directors great powers to pursue profits. However, little attention is paid to the undertaking of corporate philanthropic activities. Therefore, rules on directors’ behavior in terms of corporate philanthropy are urgently needed to resolve the conflict between philanthropy and profits. This paper aims to discuss the main purpose of corporate philanthropy behavior in China, namely, the promotion of the company, and to analyze the theoretical mechanism for placing restrictions on directors’ behavior. The concepts and details of directors’ duty of loyalty and duty of diligence are also discussed. Design/methodology/approach The paper addresses the theoretical framework for the restriction of director behavior in corporate philanthropy in China, explains the legal dilemma for the current situation and analyzes the problems associated with the determination of board directors’ behavior. Findings It is concluded that board members should give priority to their duty of loyalty and comply with their faithful obligations in corporate philanthropy. They should also fulfill their diligence obligations and not cause inconvenience and trouble for the company. Research limitations/implications Corporate philanthropy is well known as a beneficial activity to both the company and society. It not only helps to establish a good image of the company, which is in line with the interests of the shareholders and creditors, but also contributes to the development of social welfare. It is a topic worthy of deep discussion. Practical implications It is still very difficult to establish non-profit organizations because of stringent conditions on registration, organization and funding in China. Therefore, there are a limited number of independent non-governmental charitable organizations in China. Most charitable organizations have charitable expertise and government ties. Corporate philanthropy is a problem closely related to governmental administration and legal system renovation. Social implications Recently, a young girl related to the Red Cross Society of China was found guilty and arrested. This scandal has made people lose their confidence in philanthropy and has caused another round of intense discussion online. Corporate philanthropy is the focus of criticism because individuals with power gain benefits by taking advantage of their position. It is a very challenging issue for the Chinese society as to how to restore the reputation of philanthropy. Originality/value This paper points out the weakness in the current legal system as a restrictive mechanism to supervise the board directors’ behaviors in China. It analyzes the corporate philanthropy issue from the national level and highlights the significance of supervising governmental administration and corporate management through the improvement of the legal system.

Corporate Philanthropy, Research Networks, and Collaborative Innovation

Using a unique data set of corporate philanthropic activities, we find that direct giving activities are positively associated both with higher levels of innovation and innovation that is more influential, collaborative, and original. Our results suggest that much of what is ostensibly promoted as philanthropy actually reflects research‐related networking activities. The effect of direct giving on innovation is more pronounced in more opaque firms and more innovative and competitive industries. These findings provide evidence of the distinct motives by which firms choose between direct giving and foundation giving. Our study suggests that firms can use direct philanthropy to expand firm‐boundaries by developing innovation with research partners.

Why Do Family-controlled Firms Donate to Charity? The Role of Intrafamily Succession Intention, Social Status, and Religiosity

ABSTRACTDrawing on expectancy theory and the socioemotional wealth (SEW) perspective, we propose that family owners with intrafamily succession intention are more motivated to accumulate or preserve SEW. As corporate philanthropy is a critical way for family-controlled firms to accumulate or maintain SEW, family owners with intrafamily succession intention are more likely to engage in corporate philanthropic activities. Data on a nationally representative sample of family-controlled firms in China support our prediction. We also find that the relationship between intrafamily succession intention and corporate philanthropy is moderated by family owners’ social status and religiosity. The findings contribute to our understanding about family businesses, in general, and those in China, in particular, as well as the SEW perspective.

Typology of Corporate Philanthropic Activities and Success Factors

기업들은 새로운 유형의 사회공헌활동을 전개하면서 그에 따른 성과를 기대해 왔다. 그에 따라 적지 않은 연구자들은 다양한 관점에서 사회공헌활동이 가져다주는 결과를 탐색해 왔다. 그러나 아직까지 사회공헌활동이 재무적 성과(예: 주가)에 미치는 영향에 대한 이해는 명확하지 않은 실정이다.BR 본 연구는 기업의 사회공헌활동과 기업의 재무적 성과 사이의 연결고리의 미흡함과 그 과정들을 명확하게 이해할 필요성을 인식하고 과정상의 변수들을 중심으로 사회공헌활동 사례들에 대한 유형 구분을 시도하였다.BR 본 연구에서 기업의 사회공헌활동은 활동이 전개되는 대상과 예상되는 결과에 따라 구분되었다. 그 결과 사회공헌활동으로 기대되는 효과는 관리 효율성 제고, 고객 반응(제품의 판매 촉지, 기업 홍보, 구매 유도. 고객 참여로 다시 구분됨), 생산성 향상, 시장기반 구축 등으로 구분되었다. 본 연구는 이들 유형별 사례결과를 요약하면서 이러한 활동을 통한 가시적인 성과를 얻기 위해 고려되어야 할 변수들을 점검하였다.BR 마지막으로 본 연구는 사회공헌활동의 성과를 높이기 위한 핵심 요소를 논의하였다. 본 연구는 최고경영자의 장기적인 안목, 사회공헌 활동의 전략적 가치에 대한 인식, 신뢰를 통한 협력 문화의 구축, 성과측정모형의 개발을 전략적 사회공헌활동이 성과를 거두기 위한 선결요소로 제안하였다.

Strategic Philanthropy

Because it promises to benefit business and society simultaneously, strategic philanthropy might be characterized as a “happy marriage” of corporate social responsibility behavior and corporate financial performance. However, as evidence so far has been mostly anecdotal, it is important to understand to what extent empirics support the actual practice as well as value of a strategic approach, which creates both business and social impacts through corporate philanthropic activities. Utilizing data from the years 2006 to 2009 for a sample of the Dow Jones Sustainability Index (DJSI World), which monitors the world’s most sustainable companies, the authors test a model of strategic philanthropy in which the dependent variable is evidence that a firm does or does not measure business and social impacts simultaneously. From the DJSI data, the authors find a proposed measure of overall corporate social performance (CSP) to be the most important explanatory factor for engagement in strategic philanthropy. Moreover, this measure of CSP has a mediating effect on the relations between certain independent variables and strategic philanthropy. Other important findings provide support for the influence of the institutional factors industry and region on the likelihood that companies are practicing strategic philanthropy, but little effect of the business characteristics company size and profitability on that likelihood.

페이스북을 활용한 기업의 사회공헌활동의 커뮤니케이션 효과 연구 : 사회공헌활동의 적합성과 유형을 중심으로

페이스북을 활용한 기업의 사회공헌활동의 커뮤니케이션 효과 연구 : 사회공헌활동의 적합성과 유형을 중심으로

The Effects of Corporate Philanthropic Activities on the Price Increase

The Effects of Corporate Philanthropic Activities on the Price Increase