Roses given, fragrance in hand: Charity law and corporate philanthropy—Evidence from a quasi‐natural experiment in China

Abstract

This study aims to investigate the impact of the 2016 Charity Law of the People's Republic of China on corporate philanthropy and its mechanism. Based on the difference‐in‐difference framework, empirical results show that the charity law has significantly increased the charitable donation level of firms with direct product–consumer contact rather than that in other firms. The additional analysis indicates that corporate self‐interest motives, but not altruistic motives, are ruled out as the mechanisms through which corporate philanthropy is delivered. Furthermore, a closer examination reveals that the charitable donation has not remarkably enhanced firms' operating performance, while the capital market gives these firms a higher valuation.

Balancing acts: The relationship between corporate environmental irresponsibility, charitable donations, and financial performance

“…In stark contrast to their neglect of environmental responsibility, many firms publicly prioritize their charitable donations (CD) and other philanthropic activities, often driven by cultural beliefs (Wang et al, 2022). CD are considered a significant aspect of corporate social responsibility, contributing to the regulation of wealth disparities, alleviation of social conflicts, and maintenance of social stability (Lu & Cheng, 2023). Firms have come to recognize their mutually beneficial relationship with society, whereby philanthropic activities such as CD help meet the demands and expectations of stakeholders (Shi et al, 2023).…”