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Demonstration zones reform and corporate philanthropy: Evidence from China

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  • Ji, Mianmian
  • Lv, Wendai

Abstract

Place-based policy plays an important role in economic growth, but its impact on corporate philanthropy is relatively unknown. The transformation and upgrading demonstration zones reform, a place-based policy in China, delegates the discretion of giving preferential treatment to some local firms to local officials, which we characterize as the discretion of local officials. Based on this policy, this study identifies the causal effect of the discretion of local officials on corporate philanthropy by using firm-level data during 2014–2019. We find that demonstration zones reform promotes corporate philanthropy, and this effect is particularly pronounced in firms with non-state ownership, firms without political connections, firms with high financial constraints, and firms with heavy pollution. Further, we find that demonstration zones reform increases visibility, reputation, and access to resources by promoting corporate philanthropy. In addition, demonstration zones reform can improve the production efficiency of firms, especially for firms with high corporate philanthropy.

Suggested Citation

  • Ji, Mianmian & Lv, Wendai, 2022. "Demonstration zones reform and corporate philanthropy: Evidence from China," Economic Modelling, Elsevier, vol. 115(C).
    • Handle: RePEc:eee:ecmode:v:115:y:2022:i:c:s0264999322002000
    DOI: 10.1016/j.econmod.2022.105954
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    More about this item

    Keywords

    Place-based industrial upgrading reform; Discretion of local officials; Corporate philanthropy; Resource allocation; China;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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