168693113
Determinants of Corporate Philanthropy: A Case of Karachi Stock Exchange
Corporate Philanthropy (CP) has become increasingly important as a means of filling gaps in the provision of social services using Public-Private partnerships. Very little research exists on determinants and motives of CP in Pakistan. This paper utilizes data from the 2001-2011 Annual Reports of 234 firms listed on the Karachi Stock Exchange (KSE) to analyze the association of CP with different firm specific factors like firm size, firm visibility, labor intensity, firm’s financial position (measured as profitability, leverage, cash and equivalent balance, and dividend payout), and the impact of natural disasters on CP. Because this is the first study on this data set, we have employed exploratory data analysis techniques and carefully consider the impact of outliers and other non-standard features of the data. We have used Panel data analytic techniques as well as the Tobit model to analyze the associations between different firm specific factors and CP. We found that firm size, prior profitability, and natural disaster have significant positive impact on CP. We found no evidence that firms are using philanthropy for image creation. Furthermore, exploratory data analysis shows that there are some clusters of firms, which behave differently. Standard regression analysis techniques cannot deal with such cases that require more sophisticated treatment.
167826464
The Social Responsibility of Business Is to Increase Its Profits
When I hear businessmen speak eloquently about the “social responsibilities of business in a free-enterprise system”, I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are — or would be if they or anyone else took them seriously -preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.
154227192
Shareholder and stakeholder theory: after the financial crisis
Purpose - The recent financial crisis has restarted the debate of the value of both shareholder and stakeholder theories. This paper aims to continue this discussion. Design/methodology/approach - The paper reviews existing literature and examines the benefits and problems associated with these frameworks through the lens of the recent events which have taken place during the financial crisis. Findings - The main assertion of this paper is that shareholder theory is in itself a sound theory. Yet, some executives following this theory could have brought disrepute to it. In contrast, the stakeholder theoretical framework has yet to assert its influence because the concept is not yet unambiguously defined, which makes it difficult for the framework to become operational in practical business settings. Research limitations/implications - Future research should seek consensus on the scope and definition of the stakeholder model, as well as who the stakeholders should include. It should also focus on developing the tools and techniques necessary for the incorporation of stakeholder theory into business operations. Social implications - Policy makers could work with industry bodies and business leaders to encourage them to place greater emphasis on the interests of non-shareholders and encourage collaboration between various groups of stakeholders to achieve corporate goals. Originality/value - The paper continues the shareholder and stakeholder theory debate in light of the recent economic crisis.
167400513
Determinants of Corporate Philanthropy in Pakistan
The importance of corporate philanthropy and its related philosophy of corporate social responsibility have captured the attention of researchers and humanitarian groups in WTO era. Corporate donations have been considered as a critical tool to improve corporate image in a highly competitive environment. This paper explores the determinants of corporate donations based on LSE-25 index companies over the five year period 2002-06. Multiple regression techniques have been used for gauging the determinants of corporate philanthropy after collecting data from audited financial reports of companies. The study is a pioneering attempt in measuring the determinants of philanthropy in corporate sector of Pakistan.
153769869
Corporate Reputation and Social Performance: The Importance of Fit
Utilizing data on a sample of large firms, we estimate a model of corporate reputation. We find reputation, derived from the assessments of managers and market analysts, to be determined by a firm's social performance, financial performance, market risk, the extent of long-term institutional ownership, and the nature of its business activities. Furthermore, the reputational effect of social performance is found to vary both across sectors, and within sectors across the various types of social performance. Specifically, our results demonstrate the need to achieve a 'fit' among the types of corporate social performance undertaken and the firm's stakeholder environment. For example, a strong record of environmental performance may enhance or damage reputation depending on whether the firm's activities 'fit' with environmental concerns in the eyes of stakeholders.
31353646
Firm performance: the interactions of corporate social performance with innovation and industry differentiation
The impact of corporate social performance on firm financial performance has been examined previously with mixed results. This study examines the possibility that corporate social performance enhances financial performance by allowing the firm to differentiate, and that this effect may be moderated both by innovation, which also drives firm differentiation, and the level of differentiation in the industry. Hypotheses concerning both direct and moderating effects are developed and tested using secondary data. Our results support both innovation and the level of differentiation in the industry as moderators for a positive relationship between corporate social performance and financial performance: corporate social performance most strongly affects performance in low-innovation firms and in industries with little differentiation. Copyright © 2008 John Wiley & Sons, Ltd.
167780713
Corporate Social Responsibility: a Theory of the Firm Perspective
We outline a supply and demand model of corporate social responsibility (CSR). Based on this framework, we hypothesize that a firm's level of CSR will depend on its size, level of diversification, research and development, advertising, government sales, consumer income, labor market conditions, and stage in the industry life cycle. From these hypotheses, we conclude that there is an “ideal” level of CSR, which managers can determine via cost-benefit analysis, and that there is a neutral relationship between CSR and financial performance.
23106031
The competitive advantage of corporate philanthropy.
When it comes to philanthropy, executives increasingly see themselves as caught between critics demanding ever higher levels of "corporate social responsibility" and investors applying pressure to maximize short-term profits. In response, many companies have sought to make their giving more strategic, but what passes for strategic philanthropy is almost never truly strategic, and often isn't particularly effective as philanthropy. Increasingly, philanthropy is used as a form of public relations or advertising, promoting a company's image through high-profile sponsorships. But there is a more truly strategic way to think about philanthropy. Corporations can use their charitable efforts to improve their competitive context--the quality of the business environment in the locations where they operate. Using philanthropy to enhance competitive context aligns social and economic goals and improves a company's long-term business prospects. Addressing context enables a company to not only give money but also leverage its capabilities and relationships in support of charitable causes. The produces social benefits far exceeding those provided by individual donors, foundations, or even governments. Taking this new direction requires fundamental changes in the way companies approach their contribution programs. For example, philanthropic investments can improve education and local quality of life in ways that will benefit the company. Such investments can also improve the company's competitiveness by contributing to expanding the local market and helping to reduce corruption in the local business environment. Adopting a context-focused approach goes against the grain of current philanthropic practice, and it requires a far more disciplined approach than is prevalent today. But it can make a company's philanthropic activities far more effective.
167603899
Does it pay to be different? An analysis of the relationship between corporate social and financial performance
This study explores the relationship between corporate social performance (CSP) and corporate financial performance (CFP) within the context of a specific component of CSP: corporate charitable giving. A model of the determinants of the extent of corporate charitable giving is estimated and used as the basis of a classification that groups firms according to the difference between their actual and their predicted intensity of gift giving. The financial performance attributes of the classification are explored. We found that firms with both unusually high and low CSP have higher financial performance than other firms, with unusually poor social performers doing best in the short run and unusually good social performers doing best over longer time horizons. Copyright © 2008 John Wiley & Sons, Ltd.
154558734
Why Do Corporations Give to Charity
This paper explores whether corporate contributions should be tax dedu ctible within the more general context of an examination of the profi t and utility maximization motives driving contributions. The theoret ical section develops a formal structural model of the contributions process, illustrates comparative statics, and derives a set of empiri cally-testable hypotheses. Using a new source of firm data, the empir ical results indicate that profit maximization is an important motive driving contributions. This finding supports the current tax-deducti ble status of contributions (up to a seldom-encoun-tered ceiling) and favors a reform that allows firms to treat contributions as ordinary business expenses. Copyright 1988 by the University of Chicago.
153581214
An Analysis of Corporate Donations: United Kingdom Evidence
Drawing a framework from stakeholder theory, this study uses 1994 data drawn from 100 United Kingdom listed companies to test empirically whether the level of discretionary donations made by companies to charitable, social and political causes is related to four company‐specific factors, namely leverage, company size, profitability and ownership structure. Consistent with our hypotheses, the results indicate that the decision to contribute funds to charities and other bodies is positively related to company size and profitability and negatively related to leverage. However, the study provides no support for the view that there is a link between discretionary donations and a company's ownership structure.
153870036
Having, Giving, and Getting: Slack Resources, Corporate Philanthropy, and Firm Financial Performance
This study investigates financial correlates of corporate philanthropy in Fortune 1000 companies using structural equation modeling. The results suggest that cash flow (one of the most discretionary types of organizational slack) has a significant impact on a firm’s cash donations to charitable causes, but monetary donations do not affect firm financial performance. These findings support the accepted view of corporate philanthropy as a discretionary social responsibility and the traditional thinking about firm giving in the business and society literature—that doing well enables doing good. Contrary to some contemporary thinking, the findings imply no significant effect on profits from corporate generosity.
1328694
Too Little or Too Much? Untangling the Relationship Between Corporate Philanthropy and Firm Financial Performance
What is the relationship between corporate philanthropy and corporate financial performance? Some scholars argue that corporate philanthropy facilitates stakeholder cooperation and helps secure access to critical resources controlled by those stakeholders, suggesting that corporate philanthropy should be positively associated with corporate financial performance. In contrast, other scholars take a negative stance, suggesting that corporate philanthropy diverts valuable corporate resources and tends to inhibit corporate financial performance. Existing empirical studies have not found conclusive evidence on the corporate philanthropy--financial performance relationship. Integrating and extending existing perspectives, this study develops the argument that the relationship between corporate philanthropy and financial performance is best captured by an inverse U-shape. In addition, it posits that the inverse U-shaped relationship varies with the level of dynamism in firms' operational environment. Using a panel data set of 817 firms listed in the Taft Corporate Giving Directory from 1987 to 1999, we find strong support for these arguments.
153771124
Comparing Big Givers and Small Givers: Financial Correlates of Corporate Philanthropy
In a departure from the traditional studies of corporate philanthropy that focus on board composition, advertising, and social networks, the authors investigate the financial correlates of corporate philanthropy. The research design controls for firm size and industry while observing firms from a variety of industries. The sample contains matched pairs of generous and less generous corporate givers. The authors find, as hypothesized, a positive relationship between a firm's cash resources available and cash donations, but no significant relationship between corporate philanthropy and firm financial performance, regardless of whether corporate philanthropy is measured as cash payouts or the aggregate contributions that charities actually receive, and regardless of whether financial performance is gauged using accounting measures or market measures. Whereas the link between available resources and corporate philanthropy is well accepted in the literature on corporate social responsibility, it has been rarely tested and never so definitively found as in this research.
153769243
An investigation into the givings by large corporate donors to UK charities, 1979—86
This paper, the first study of its kind to-date carried out for the UK, is concerned with the scale and determinants of charitable givings by large corporate donors in the UK. The investigation is carried out using pooled information on 53 companies over the 8 years from 1979 to 1986 during which period the rate of corporation tax fell from 52% to 35%. A result of particular interest is that contributions were related positively to the rate of tax.
154940508
The UK supermarket industry: an analysis of corporate social and financial performance
In a previous paper (Moore, 2001), the headline findings from a study of social and financial performance over three years of eight firms in the UK supermarket industry were reported. These were based on the derivation of a 16-measure social performance index and a 4-measure financial performance index. This paper discusses the formulation of the indices and then reports on: discussions with two supermarket firms concerning the overall results; inter-relationships between individual financial performance measures; inter-relationships between individual social performance measures; stakeholder group analysis; and inter-relationships between turnover, age and gearing with social performance measures. The paper discusses these inter-relationships, incorporating comments from the interviews with the two supermarket firms, and reports on both factor and cluster analysis. 
 
The interviews lend support for Preston and O’Bannon’s (1997) Available Funding Hypothesis in both its positive and negative form. The findings show that there are individual or combinations of related measures that could be used as surrogate measures for social and financial performance, instead of deriving a full index. However, the recommendation is that a full index continues to be used until there is further corroboration of these results. The findings also provide statistically significant support for the Negative Synergy Hypothesis (Preston and O’Bannon, 1997), show a statistically significant association between pre-tax profits (both lagged and contemporaneous) with community contributions, and show that all statistically significant associations between individual social performance measures are positive – suggesting that they are mutually reinforcing. The association of size with social performance, noted in the previous paper, is also reinforced. 
 
Findings in relation to the proportion of women managers and the number of women on the Board and positive associations with other social and environmental performance measures raise interesting gender issues for business ethics. Factor analysis leads to no clear conclusions but cluster does show two or three clear clusters of firms, where size would seem to be the main but not sole factor. Further areas of research are noted.
145204967
Data in Search of a Theory: A Critical Examination of the Relationships Among Social Performance, Social Disclosure, and Economic Performance of U.S. Firms
Inconsistent findings have resulted from studies of the relationships among social disclosure, social performance, and economic performance of U.S. corporations. No clear tendency can be detected. The main reasons for these inconsistencies are: (a) a lack in theory, (b) inappropriate definition of key terms, and (c) deficiencies in the empirical data bases currently available. Suggestions are made as to how this situation can be improved.
153828009
The Effects of Firm Size and Industry on Corporate Giving
Recent downward trends in corporate giving have renewed interest in the factors that shape corporate philanthropy. This paper examines the relationships between charitable contributions, firm size and industry. Improvements over previous studies include an IRS data base that covers a much broader range of firm sizes and industries as compared to previous studies and estimation using an instrumental variable technique that explicitly addresses potential simultaneity between charitable contributions and profitability. Important findings provide evidence of a cubic relationship between charitable giving and firm size and evidence of strong industry effects. The plus-minus-plus regression coefficient sign pattern for the cubic firm size model suggests that small and large firms give more relative to total receipts with lower giving ratios among medium size firms. One interpretation for this finding is that small firms are close to the communities they serve while high visibility creates a need for large firm philanthropy. Strong industry effects provide evidence of inter-industry differences in giving culture and/or different public relations requirements across industries.
154893428
Taxes and Corporate Giving to Charity
An extensive body of the literature has examined the determinants of individual giving to charity. Indeed, the role of the personal income tax continues to attract considerable attention. In contrast, very few have explored the effects of taxes on corporate giving. This article represents an attempt to fill this void. It employs a large sample of corporate tax returns and finds that taxes are an important consideration in corporate giving.
150863793
The practice of corporate social performance in minority- versus nonminority-owned small businesses
This study compares corporate social performance in terms of charitable contributions of minority-owned and nonminority-owned small businesses. In this sample, minority-owned small businesses are younger, have less full-time employees, and lower annual sales. Minority-owned small businesses donate more funds to religious organizations than nonminority-owned small businesses. When annual sales are accounted for, minority-owned businesses contribute more total dollars to all charitable organizations than nonminority-owned firms. Suggestions for future research in this area are delineated.
167766292
Doing good deeds in times of need: a strategic perspective on corporate disaster donations
Major corporations often respond charitably to humanitarian needs in times of disaster. However, disasters can also be negative events that impose non-trivial costs on firms, and under adverse conditions, firms typically donate less, not more. This paper takes a strategic perspective on corporate magnanimity in times of crisis by looking at the relationship between firm value, reputation, and philanthropy in the case of Hurricane Katrina. First, we consider how Katrina may have had negative effects on stock prices of U.S. Fortune 500 firms. Second, we investigate whether a reputation for irresponsible behavior might affect 1) the magnitude of the disaster’s effect on stock prices and 2) the likelihood of making philanthropic donations to disaster relief. We find that Katrina had a significant negative impact on firms’ stock prices. Further, we find that the more a firm was known for social irresponsibility, the more negative the abnormal returns during Katrina, and the greater the likelihood of making a donation in response to Katrina. Our findings have theoretical and managerial implications for the value of reputation and corporate philanthropy.
167825869
The relationship between corporate social responsibility and shareholder value: an empirical test of the risk management hypothesis
Do shareholders gain when managers disperse corporate resources through activities classified as corporate social responsibility (CSR)? Strategy scholars have recently developed a theoretical model that links such activities to shareholder value when a firm suffers a negative event; we test key portions of this theory of the ‘insurance-like’ property of CSR activity. We posit that such activity leads to positive attributions from stakeholders, who then temper their negative judgments and sanctions toward firms because of this goodwill. We extend the risk management model by theorizing that some types of CSR activities will be more likely to create goodwill and offer insurance-like protection than other types. We delineate several firm and event specific characteristics that we expect to influence the link between CSR activities and an insurance effect. We then test our model using an event study of 178 negative legal/regulatory actions against firms throughout the 11 years from 1993–2003. We find that participation in institutional CSR activities—those aimed at a firm's secondary stakeholders or society at large—provides an ‘insurance-like’ benefit, while participation in technical CSRs—those activities targeting a firm's trading partners—yields no such benefits. We conclude by considering the implications of our findings for future theorizing and research into the economic value of CSR engagement. Copyright © 2008 John Wiley & Sons, Ltd.
59045184
Shareholder value, stakeholder management, and social issues: what's the bottom line?
We test the relationship between shareholder value, stakeholder management, and social issue participation. Building better relations with primary stakeholders like employees, customers, suppliers, and communities could lead to increased shareholder wealth by helping firms develop intangible, valuable assets which can be sources of competitive advantage. On the other hand, using corporate resources for social issues not related to primary stakeholders may not create value for shareholders. We test these propositions with data from S&P 500 firms and find evidence that stakeholder management leads to improved shareholder value, while social issue participation is negatively associated with shareholder value. Copyright © 2001 John Wiley & Sons, Ltd.
167689230
Exploring the Financial Value of a Reputation for Corporate Social Responsibility During a Crisis
Is there financial value in a reputation for corporate social responsibility during a crisis? The existing empirical evidence for a corporate social–financial performance link has been mixed, but perhaps this is, in part, due to most studies' emphasis on a reputation's impact on positive news. What of the opposite case — whether a reputation for social responsibility acts as a ‘reservoir of goodwill’ during corporate crises? This paper draws on literature from the fields of reputation, strategy, risk and social responsibility to outline the reasons why there might be financial value in a reputation for corporate social responsibility during a crisis and then tests them by examining investor reaction to the 1999 Seattle World Trade Organization (WTO) failure, caused by disagreement among member nations on labor and environmental standards and public protests over the same. Seattle represented apparent heightened demand for corporate social responsibility and an increased risk of stricter, future regulation. It was found that a reputation for social responsibility protected firms from stock declines associated with this crisis, even when controlling for possible trade and industry effects.
152656582
Corporate Philanthropy in the U.K. 1985–2000 Some Empirical Findings
This paper briefly reviews the theories that seek to explain the phenomenon of corporate charitable donations and then provides a review of the empirical issues that have arisen in previous studies in this area. The findings of an analysis of charitable donations data from the entire U.K. FTSE index for the years 1985–2000 are then reported. These findings include the observation of a time-related increase in charitable donations, which is compared with an earlier study to give a 24 year history of charitable donations in the U.K. The findings note little responsiveness of the monetary value of charitable donations to the economic performance of firms. An international comparison over time against U.S. trends is also reported and shows how U.S. corporations have traditionally been more generous than U.K. firms, but that the trend in the U.S. is downwards. Membership of a U.K.-based "tithing" club (the PerCent Club) is shown to be associated with higher profit performance against non-members. Members' charitable contributions against profit are shown to be higher than the FTSE mean although short of the 0.5% target figure in "cash" terms. The paper concludes with a brief discussion of these findings in relation to the theoretical positions advanced for corporate philanthropy.
10658831
Corporate philanthropic practices
Abstract We study corporate philanthropy using an original database that includes firm-level data on dollar giving, giving priorities, governance, and managerial involvement in giving programs. Results provide some support for the theory that giving enhances shareholder value, as firms in the same industry tend to adopt similar giving practices and firms that advertise more intensively also give more to charity. But much of our evidence indicates that agency costs play a prominent role in explaining corporate giving. Firms with larger boards of directors are associated with significantly more cash giving and with the establishment of corporate foundations. Consistent with effective monitoring by creditors, firms with higher debt-to-value ratios give less cash to charities and are less likely to establish foundations. The empirical work considers the impact of industry regulation on giving and controls for state philanthropy laws and fiduciary responsibility laws.
154048980
Corporate Philanthropy, Criminal Activity, and Firm Reputation: Is There a Link?
This study examined the influence of corporate giving programs on the link between certain categories of corporate crime and corporate reputation. Specifically, firms that violate EPA and OSHA regulations should, to some extent, experience a decline in their reputations, while firms that contribute to charitable causes should see their reputations enhanced. The results of this study support both of these contentions. Further, the results suggest that corporate giving significantly moderates the link between the number of EPA and OSHA violations committed by a firm and its reputation. Thus, while a firm's reputation can be diminished through its violation of various government regulations, the extent of the decline in reputation may be significantly reduced through charitable giving.
42269104
Firm Ownership and Philanthropy
This paper empirically examines the relationship between firm ownership structure and corporate charitable donations. Using a panel data set of 1,017 listed Korean firms, we find that larger firms with higher advertising intensity and lower export intensity 'give' relatively more, suggesting that charitable donations are both strategic and discretionary corporate expenditures. In addition, the study explores the effects of ownership structure on corporate philanthropy. We find a positive relationship between charitable donations and foreign ownership. However, we do not find a significant effect of corporate philanthropy on financial performance, indicating that donations appear to be "revenue" neutral.
154829565
Taxes and Corporate Charity: Empirical Evidence From Micro Level Panel Data
Addresses resent implications reignited by the 1994 elections. Issued raised include functional roles of local, state, and federal governments and also, the appropriate balance between public and private sectors.
62753863
Analysis of Panel Data
This book provides a comprehensive, coherent, and intuitive review of panel data methodologies that are useful for empirical analysis. Substantially revised from the second edition, it includes two new chapters on modeling cross-sectionally dependent data and dynamic systems of equations. Some of the more complicated concepts have been further streamlined. Other new material includes correlated random coefficient models, pseudo-panels, duration and count data models, quantile analysis, and alternative approaches for controlling the impact of unobserved heterogeneity in nonlinear panel data models.
2317142
Advertising, Breadth of Ownership, and Liquidity
We provide empirical evidence that a firm's overall visibility with investors, as measured by its product market advertising, has important consequences for the stock market. Specifically we show that firms with greater advertising expenditures, ceteris paribus, have a larger number of both individual and institutional investors, and better liquidity of their common stock. Our findings are robust to a variety of methodological approaches and to various measures of liquidity. These results suggest that the investors' degree of familiarity with a firm may affect its cost of capital and consequently its value. Copyright 2004, Oxford University Press.