How market value relates to corporate philanthropy and its assurance. The moderating effect of the business sector

Abstract

Corporate philanthropy strategy integrated into the core business constitutes a novel vision and a little‐explored field of study with regard to corporate social commitment. The goal of this study is to analyse how the diverse ways of managing and assuring philanthropy can be considered signals of a firm's social commitment and consequently affect its market value. In addition, the analysis considers whether the business sector moderates those relationships. We aim to provide a comprehensive vision of corporate philanthropy and its effect on market value. From a sample of 965 firm‐years, of 193 firms from 2011 to 2015, we found that the market responds positively to the professional, independent management of philanthropy via a foundation, in preference to donations, and welcomes external assurance of corporate philanthropy as a set of actions that improve the perceived reliability of philanthropic activities. In addition, we observe a moderating effect of the business sector on the relationships among corporate philanthropy, assurance and the company's market value. The main contribution of this study is the provision of new evidence of how corporate philanthropy and its assurance are effective signals that reduce the information asymmetries between firms and investors, affecting company market value positively.

Analysis of Corporate Social Responsibility Execution Effects on Purchase Intention with the Moderating Role of Customer Awareness

“…Therefore, the businesses must take care of philothropic responsibility in order to fullfill the needs of community. It should be understood that the content of CSR and what it actually applies to is the corporation's legal and philanthropic duties toward society go beyond its economic and legal responsibilities [85]. They indicated it might be more influential when the company had a strong corporate image with CSR activities.…”

The assurance of sustainability reports and their impact on stock market prices

“…Consequently, it is also expected to generate credibility and trust among stakeholders (Simnet 2012). In this regard, it is worth highlighting a small group of studies focused on analysing the reaction of stakeholders to the assurance of sustainability reports (Dhaliwal et al 2012;Romero et al 2014;Fazzini and Dal Maso 2016;Arco-Castro et al 2020).…”

“…Second, we have studies that analyse the characteristics of the firms making the decision to begin an external assurance process for the sustainability information (Simnett et al 2009;Fernández-Feijóo-Souto et al 2012;Zorio et al 2013;Castelo Branco et al 2014;Cho et al 2014;Sierra et al 2014;Fernández-Feijóo-Souto et al 2015;Vaz Ogando et al 2018). Lastly, we should highlight an emerging line of research focused on analysing the reaction of the different stakeholders to obtaining sustainability report assurance (Dhaliwal et al 2012;Romero et al 2014;Fazzini and Dal Maso 2016;Arco-Castro et al 2020).…”

Corporate Social Responsibility and Crowdfunding: The Experience of the Colectual Platform in Empowering Economic and Sustainable Projects

“…The present study could have important implications not only in the literature but also from the point of view of crowdfunding platforms and traditional financial systems in terms of the construction and incorporation of new variables across CSR rankings that serve as elements for measure, based on signal theory [44,45], enterprises' sustainability performance, risk, and, therefore, the evaluation of granting loans.…”

“…CSR is multidimensional and addresses various theoretical frameworks, the most widely used of which are the theory of stakeholders, which consists of the links that the company has with the various interest groups [40]; the theory of legitimacy, as defined as a perception where a business operates in society through a social contract and its actions are desirable, appropriate within a socially constructed system of norms, values, beliefs, and definitions [41,42]; institutional theory examines organizational forms and explains the reasons for having homogeneous characteristics or forms in organizations that operate within a framework of appropriate norms, values, and/or economic behavior [43]. Theoretical frameworks have provided support for the study of CSR in the business sphere, so studies about philanthropy have been related to the use of CSR as a signal to create confidence to investors [44], and the reduction of conflicts between firms and stakeholders [45]. In this sense, signal theory is an adequate framework to study how and why investors value CSR policy.…”