Are Charitable Donations Really Good or Hypocritical? From a Perspective of Enterprise Violation

Li Xiaoling, Hou Xiaotian, Ge Changfu

Journal of Shanghai University of Finance and Economics Vol. 19, Issue 04, pp. 66 - 78 (2017)  DOI:10.16538/j.cnki.jsufe.2017.04.006

Abstract

The issue that charitable donations are really good or hypocritical has been a hot focus in academic research and practice field in recent years. From a perspective of enterprise violation, this paper uses A-share listed companies in China from 2003 to 2015 as a sample, and empirically examines the impact of corporate violation on charitable donations. Furthermore, this paper makes grouping study on the influence from two perspectives of institutional environment and property rights. It arrives at the conclusions as follows: firstly, enterprise violation and charitable donations have a significantly positive correlation; secondly, enterprise violation has a more positive impact on charitable donations in regions with better institutional environment; thirdly, compared with state-owned enterprises, non-state-owned enterprise violation has a more positive impact on charitable donations. The above results suggest that charitable donations may be used by companies as a tool to cover up their tendency of violation, divert public attention, and avoid violation investigation. Besides, the instrumental motivation of non-state-owned companies is stronger than the one of state-owned companies. What’s more, good institutional environment will further induce this opportunistic motivation because it improves the risks and costs of enterprise violation. This paper reveals the hidden motivation of charitable donations from a perspective of enterprise violation, and enriches the research on the motivation of charitable donations.

Keywords

charitable donation; enterprise violation; institutional environment; property right