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Corporate philanthropy and investment efficiency: Empirical evidence from China

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Listed:
  • Chen, Jun
  • Dong, Wang
  • Tong, Jamie Yixing
  • Zhang, Feida Frank

Abstract

Using panel data from China, we find a positive relationship between philanthropic engagement and investment efficiency. In addition, we find that the positive association between philanthropy and investment efficiency is stronger when the company is located in a region with better institutional environments. Our results suggest that companies engaging in philanthropic donations have incentives to enhance their reputation and/or promote their relationships with stakeholders, leading to lower agency problems and higher investment efficiency.

Suggested Citation

  • Chen, Jun & Dong, Wang & Tong, Jamie Yixing & Zhang, Feida Frank, 2018. "Corporate philanthropy and investment efficiency: Empirical evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 51(C), pages 392-409.
    • Handle: RePEc:eee:pacfin:v:51:y:2018:i:c:p:392-409
    DOI: 10.1016/j.pacfin.2018.08.008
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