Prior studies in business ethics highlight the role of philanthropy in shaping stakeholders’ perceptions of a firm’s underlying moral tendencies and values. Scholars argue that philanthropy-based character inferences influence whether and how stakeholders engage with firms. We extend this line of reasoning to examine the impact of philanthropy on firms’ contracting costs in the capital market. We posit that philanthropy-based character inferences reduce investors’ agency concerns, thereby reducing firms’ cost of capital. We also posit that the strength of the philanthropy–cost (...) of capital relationship is contingent on uncertainty regarding a firm’s character, visibility of a firm, and prevailing philanthropic norms. We test and find support for our arguments in a longitudinal study of philanthropy and the cost of capital. Our findings have implications for business ethics research on corporate philanthropy and corporate social performance and for organizational research on social judgment. (shrink)

Considerable interest exists regarding the media’s influence on corporate reactions, but the link between media visibility and corporate philanthropic response is not clear. Natural disasters thus provide an environment that makes visible the general processes relevant to that link. Based on agenda-setting theory, stakeholder theory, and impression-management theory, we propose that corporations that are highly visible in the news media are more likely to engage in CPR and donate more money. We also propose that companies with reputations for irresponsibility or (...) vulnerability strengthen that tendency. Data from Chinese firms after the Wenchuan earthquake on May 12, 2008, and the corresponding empirical results support our hypotheses. This study also shows that CPR is an active conduit for deflecting undesired reputations. (shrink)

How to mitigate stock price crash risk has become a focus in the theoretical and practical fields. Building on the work of Kim et al., this paper investigates the relation between corporate philanthropy and crash risk under the unique Chinese institutional background. The results show that both state ownership and the 2005 split share reform attenuate the mitigating effect of corporate philanthropy on crash risk. Specifically, the negative relation between corporate philanthropy and crash risk is less pronounced for state-owned enterprises (...) than for non-state-owned enterprises, and it is also less pronounced after firms accomplish the split share reform. Further, this effect is more pronounced for firms with greater financial risks and poorer performance. Our paper contributes to the growing literature on the determinants of stock price crash risk and the economic consequences of corporate philanthropy. It also offers useful guidance to firms that are seeking to reduce stock price crash risk in emerging markets. (shrink)

This article examines whether the charitable giving amount and likelihood of firm response to catastrophic events relate to firms' ownership type using a unique dataset of listed firms in China, where state ownership is still prevalent. Based on the data of Chinese firms' response to the 2008 Sichuan earthquake, we find that the extent of corporate contributions for state-owned firms following this disaster is less than that for private firms. State-owned firms are also less likely to respond in this disaster (...) compared to private firms. The results also reveal that firm size, profitability, geography, cash resource available, and leverage affect firms' philanthropic disaster response behavior in China. (shrink)

This article examines whether the charitable giving amount and likelihood of firm response to catastrophic events relate to firms’ ownership type using a unique dataset of listed firms in China, where state ownership is still prevalent. Based on the data of Chinese firms’ response to the 2008 Sichuan earthquake, we find that the extent of corporate contributions for state-owned firms following this disaster is less than that for private firms. State-owned firms are also less likely to respond in␣this disaster compared (...) to private firms. The results also␣reveal that firm size, profitability, geography, cash resource available, and leverage affect firms’ philanthropic disaster response behavior in China. (shrink)

This article examines whether the likelihood and amount of firm charitable giving in response to catastrophic events are related to firm advertising intensity, and whether industry competition level moderates this relationship. Using data on Chinese firms’ philanthropic response to the 2008 Sichuan earthquake, we find that firm advertising intensity is positively associated with both the probability and the amount of corporate giving. The results also indicate that this positive advertising intensity-philanthropic giving relationship is stronger in competitive industries, and firms in (...) competitive industries are more likely to donate. This study thus provides evidence suggesting that even in the wake of catastrophic events, corporate philanthropic giving is strategic. (shrink)

Current literature suggests that corporate social responsibility (CSR) can affect consumers' attitudes towards an organization and is regarded as a driver for reputation-building and fostering sustained consumer patronage. Although prior research has addressed the direct influence of CSR on consumer responses, this research examined the mediating influence of consumer's perceived organizational motives within an NGO setting.Given the heightened public attention surrounding the 2008 Beijing Olympic Games, data were collected from consumers of the Games to assess their perceptions of the International (...) Olympic Committee's (IOC) socially responsible initiatives. We hypothesized that consumers of the Games were likely to cognitively elaborate on CSR messages by way of three specific attribution effects derived from the literature. The results show that, contingent on CSR awareness, consumers responded positively to social efforts judged to be values-driven and stakeholder-driven; and a negative response was seen for efforts judged to be strategic. These attribution effects influenced various types of patronage and perceived organizational reputation. (shrink)

Using empirical evidence gathered from Chinese listed companies, this article explores the relationship between micro-governance mechanisms and corporate philanthropy from a corporate governance perspective. In China’s emerging market, ultimate controlling shareholders of state-owned enterprises are reluctant to donate their assets or resources to charitable organizations; in private enterprises marked by more deviation in voting and cash flow rights, such donations tend to be more likely. However, the ultimate controllers in PEs refuse to donate assets or resources they control or own, (...) which implies that corporate philanthropy by PEs comes at the cost of others, through assets or resources owned by minority shareholders. Even after devastating natural disasters such as the 2008 Wenchuan Earthquake, the controlling shareholders continue to express reluctance to donate any assets they control. Despite widespread evidence that corporate philanthropy boosts corporate growth and profitability, these ultimate controllers indicate no intention to donate their own money as a means to improve corporate performance. (shrink)

In order to gain greater insight into the nature of corporate social responsibility (CSR) during a time of crisis, the study examines the commitment of firms to continue to engage in CSR activity despite financial pressures to divert their slack resources elsewhere. The setting of the study is CSR activity during the perhaps unprecedented global crisis associated with the COVID-19 pandemic. Based on a qualitative research method approach, both a variety of media sources and the relevant academic literature are reviewed (...) in order to identify examples of CSR activity related specifically to COVID-19. The examples are then categorized and situated according to Professor Archie Carroll’s well-known CSR Pyramid framework describing the economic, legal, ethical, and philanthropic domains of CSR. As such, this study is the first to extend the rich literature stream utilizing Carroll’s CSR Pyramid within the unique context of a global pandemic. (shrink)

Recent research suggests that philanthropy’s value to the firm is largely mediated by contextual factors such as managers’ assumed motives for charity. Our article extends this contingency perspective using a “sensegiving” lens, by which external actors’ interpretations of organizational actions may be influenced by the way in which the organization communicates about those actions. We consider how sensegiving features in philanthropy-related press releases affect whether investors value those donation decisions. For the empirical investigation in this study, we analyze abnormal returns (...) to announcements by U.S. Fortune 500 firms documenting their donations to Hurricane Katrina disaster relief in 2005. We expect that in general, donation decisions would be controversial given the uncertainty surrounding the hurricane’s economic effects at the time. However, we also propose that announcements emphasizing employee involvement in the donation send investors positive signals about the firm’s ability to bounce back from the disaster’s adverse effects. We find empirical support for the proposed hypotheses, and discuss the implications for theory and practice. (shrink)

In recent years, major disasters have figured prominently in the media. While corporate response to disasters may have raised corporate philanthropy to a new level, it remains an understudied phenomenon. This article draws on comparative research on corporate social responsibility (CSR) and corporate philanthropy to explore the geography of corporate philanthropic disaster response. The study analyzes donation announcements made by Fortune Global 500 firms from North America, Europe and Asia to look for regional patterns across three recent disasters: the South (...) Asian Tsunami, Hurricane Katrina, and the Kashmiri earthquake. The results reveal inter-regional differences in the overall likelihood of donations and in their cash value, in addition to the identification of home-region- and local presence effects. Implications for researchers and practitioners are discussed. (shrink)

Scholars have long suggested that CEOs can benefit from corporate philanthropy. However, little is known about this relationship in contexts of authoritarian capitalism such as China, where the state not only uses its control of economic entities to pursue social goals but also plays a key role in CEOs’ careers. We theorize how corporate philanthropy among state-controlled firms increases the CEO’s likelihood of receiving career benefits from the state in the form of outside directorships. Outside directorships represent an important form (...) of social capital in the Chinese context, and corporate philanthropy is an important mechanism through which social capital can be acquired. In addition, we theorize how two factors—the degree of state ownership and the number of independent directors on the CEO’s board—moderate this relationship. Analyzing a 12-year panel of state-controlled, publicly-listed firms in China comprising 6,594 firm-year observations, we find general support for our ideas. In so doing, we contribute to scholarship on the business–society relationship and corporate governance in the context of authoritarian capitalism. (shrink)

Research on corporate philanthropy typically focuses on organization-external pressures and aggregated donation behavior. Hence, our understanding of the organization-internal structures that determine whether a given organization will respond philanthropically to a specific human need remains underdeveloped. We explicate an attention-based framework in which specific dimensions of organization-level attention focus interact to predict philanthropic responses to an emergent human need. Exploring the response of Fortune Global 500 firms to the 2004 South Asian tsunami, we find that management attention focused on people (...) inside the organization interacts with both attention for places and attention for practices to predict the likelihood of charitable donations. Our research thus extends beyond the prevailing institutional perspective by highlighting the role of attention focus in corporate responsiveness to emergent societal issues. (shrink)

This study examines the practice of corporate social responsibility (CSR) during COVID-19. Little is known about how organizations practice CSR during acute exogenous crises. Overlooking how CSR practices change during a crisis matters because organizations are compelled into trade-offs that carry implications for their CSR initiatives. Analysis of interview data with CSR managers, from 21 Dubai-based business organizations during COVID-19, uncovers changes in the content and process of CSR during the pandemic. The results show that the practice of CSR underwent (...) a fundamental change in focus as organizations shifted to an employee-centric model of CSR and away from an environmental one. Measures placed on organizations and society to combat the pandemic also led to a recalibration of stakeholder and issue salience, with notable effects on CSR that challenge the capability of the power–legitimacy–urgency framework to anticipate these shifts. We consider the impacts associated with the shift in the content of CSR initiatives and process of their implementation and discuss the implications of the findings for CSR theory, research, policy, and practice. (shrink)

Using a signaling framework, we argue that ethical behavior as evidenced by charitable donations is viewed more positively by investors when seen not to be based on self-serving motives but rather on authentic generosity that builds moral capital. The affirmed religiosity of CEOs may make their ethical position more credible, while their embeddedness within a family business suggests that CEOs are backed by powerful owners with long-time horizons and a desire to build moral capital with stakeholders. We find in a (...) study of market responses to 1572 corporate donations by S&P 1500 firms that financial markets react more positively to charitable initiatives from firms with religion-declared CEOs, but only if these are family businesses. (shrink)

Current literature suggests that corporate social responsibility (CSR) can affect consumers’ attitudes towards an organization and is regarded as a driver for reputation-building and fostering sustained consumer patronage. Although prior research has addressed the direct influence of CSR on consumer responses, this research examined the mediating influence of consumer’s perceived organizational motives within an NGO setting. Given the heightened public attention surrounding the 2008 Beijing Olympic Games, data were collected from consumers of the Games to assess their perceptions of the (...) International Olympic Committee’s (IOC) socially responsible initiatives. We hypothesized that consumers of the Games were likely to cognitively elaborate on CSR messages by way of three specific attribution effects derived from the literature. The results show that, contingent on CSR awareness, consumers responded positively to social efforts judged to be values-driven and stakeholder-driven; and a negative response was seen for efforts judged to be strategic. These attribution effects influenced various types of patronage and perceived organizational reputation. (shrink)

Business Ethics: A European Review, EarlyView.

The conceptual literature increasingly portrays corporate philanthropy (CP) as an old-fashioned and ineffective operationalization of a firm’s corporate social responsibility. In contrast, empirical research indicates that corporations of all sizes, and both in developed and emerging economies, actively practice CP. This disadvantaged status of the concept, and research, on CP, complicates the advancement of our knowledge about the topic. In a systematic review of the literature containing 122 journal articles on CP, we show that this business practice is loaded with (...) unique characteristics, strengths, and weaknesses, and both conceptual and practical challenges that require renewed attention. We identify six interrelated but distinctive research themes in the literature: concept, motives, determinants, practices, business outcomes, and social outcomes. Dividing the literature on CP into six research themes creates an insightful comprehensive map of this intellectual terrain. Moreover, we distinguish among the level at which CP is analyzed: individual, organizational, institutional, or any combination of these levels. The review reveals significant gaps in the knowledge on CP. Most importantly we find that the conceptualization is limited, the research is mostly quantitative, the effects of CP on society are severely under-researched, and there is a lack of multilevel analyses. A detailed future research agenda is offered, including specific suggestions for research designs and measurements. (shrink)

We review some 30 years of academic research on corporate philanthropy, taking stock of the current state of research about this rising practice and identifying gaps and puzzles that deserve further investigation. To do so, we examine a total of 162 academic papers in the fields of management, economics, sociology, and public policy, and analyze their content in a systematic fashion. We distinguish four main lines of inquiry within the literature: the essence of corporate philanthropy, its different drivers, the way (...) it is organized, and its likely outcomes. After reviewing the main findings of the literature, we build on several research gaps to highlight directions for future research on corporate philanthropy with an interest in strengthening our understanding of this fascinating phenomenon at the crossroads of business and society. (shrink)

Using a sample of Chinese listed firms for the period of 2004–2010, this study examines the impact of religion on corporate philanthropic giving. Based on hand-collected data of religion and corporate philanthropic giving, we provide strong and robust evidence that religion is significantly positively associated with Chinese listed firms’ philanthropic giving. This finding is consistent with the view that religiosity has remarkable effects on individual thinking and behavior, and can serve as social norms to influence corporate philanthropy. Moreover, religion and (...) corporate philanthropic giving have a significantly weaker (less pronounced) positive association for state-owned enterprises than for non-state-owned enterprises. The results are robust to a variety of sensitivity tests. Our results highlight religious influence on corporate philanthropic giving in contemporary China, an old traditional country with a typical communist economy. (shrink)

In this study, I examine the hidden connection between corporate philanthropic giving and corporate environmental misconduct. Using survey data from Chinese family-owned firms, I provide strong and consistent evidence to show that corporate environmental misconduct is significantly positively associated with corporate philanthropic giving, suggesting that some Chinese family-owned firms act philanthropically to divert public attention from their environmentally unfriendly behavior. Moreover, the positive association between corporate environmental misconduct and corporate philanthropic giving is less pronounced for politically connected family-owned firms than (...) for their counterparts. The above results are robust to various sensitivity tests. My findings suggest that environmental misconduct dressing may be an additional motivation for corporate philanthropic giving and that different dimensions of corporate social responsibility may be inherently inconsistent in the given institutional setting. (shrink)

Despite receiving a great deal of research attention, the effect of corporate philanthropy on shareholder value remains inconclusive. To address this issue, the present paper examines emotionality as an important factor based on which investors infer about the firm’s motive as well as the beneficiary’s worthiness and react accordingly. Consistent with attribution theory, our event study shows that announcements with more emotional expressions are associated with higher cumulative abnormal stock returns and the effect is stronger when investor attention is greater. (...) We further find that the positive interaction effect between emotionality and investor attention is more pronounced for scandal-free firms than for firms with corporate social irresponsibility (CSI). The empirical evidence remains consistent under various robustness tests. The paper concludes with implications for future research and managerial practices. (shrink)

We examine corporate philanthropic decisions in response to the local spread of COVID-19. From a strategic perspective, firms may proactively undertake philanthropic efforts to limit the spread of the pandemic and avoid a degraded business environment. From the perspective of non-trivial costs, increased economic uncertainty can raise concerns about business survival and lead to conservative philanthropic strategies. Following the proverb “prosperity makes friends, adversity tries them,” at the provincial level, our results support the second perspective. Specifically, when the spread of (...) the pandemic worsens in a province, local firms are less likely to make COVID-19-related donations in terms of likelihood and amount. Investors also react negatively, not only to the local spread of COVID-19 but also to COVID-19-related philanthropic donations. At the organizational level, our evidence indicates that there is at least some level of cost–benefit analysis underlying corporate philanthropic decisions. Specifically, corporate philanthropic donations, especially those made to the local business environment, are significantly affected by organizational-level factors, such as pre-existing resource availability and motives to acquire political and reputational resources. Overall, our multilevel study presents a comprehensive picture of corporate philanthropic decisions amid the COVID-19 crisis. (shrink)

When natural disasters strike, a network of individuals, aid agencies, and corporations join together in a humanitarian effort to provide relief and recovery to those in need. Corporations, in particular, have played an increasing role in disaster assistance by providing financial support, goods, services, and logistic coordination (Muller and Whiteman 2009). Previous research has addressed corporate responses to disaster by investigating the factors that impact the likelihood of giving. Instead of focusing on the likelihood of corporate action, or inaction, we (...) address how different types of compassion are employed by corporations when they engage in disaster relief. We investigate how the use of language signals either strategic or altruistic compassion. (shrink)