Is corporate philanthropy a pretext for executives' excess perk consumption? Evidence from China

Abstract

Using a sample of Chinese listed firms from 2007 to 2019, we investigate the impact of corporate philanthropy on excess perks. Companies are likely to make philanthropic donations from the motivations of building political connections, serving the personal interests of self‐serving managers, disguising excess perks and deviating public attention, leading to higher excess perks. Agency theory is probably a view to interpret the positive relationship. From the perspectives of CEO power and board effectiveness, we examine the impact of corporate governance on the relationship between corporate philanthropy and excess perks. The findings provide valuable insights for directors, managers and shareholders.

Customer concentration and corporate charitable donations: Evidence from China

“…Scholars have found that firms use corporate philanthropy as a window‐dressing tool to shield themselves from public pressure in the wake of corporate environmental scandals (Du, 2015; Wu et al, 2021). Managers may use corporate philanthropy to extract personal benefits (Su et al, 2022) or alleviate personal guilt (Ji et al, 2021).…”