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Corporate philanthropy: Insights from the 2008 Wenchuan Earthquake in China

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  • Gao, Fox
  • Faff, Robert
  • Navissi, Farshid

Abstract

We explore the equity market impact of board announcements of corporate donations made in response to the May 12th 2008 Wenchuan earthquake in China. Our event study uses a sample of board announcements of corporate donations from Chinese A-share listed companies. We find that donor companies providing products and/or services directly to end-consumers tend to enjoy higher abnormal stock returns, thereby documenting a link between corporate social responsibility and corporate financial performance at least for some corporate citizens. In light of the empirical results, the study suggests that corporate philanthropic involvement should be treated as a differentiated type of marketing tool to obtain social reputation and publicity, as well as a relationship cultivation mechanism with local government authorities.

Suggested Citation

  • Gao, Fox & Faff, Robert & Navissi, Farshid, 2012. "Corporate philanthropy: Insights from the 2008 Wenchuan Earthquake in China," Pacific-Basin Finance Journal, Elsevier, vol. 20(3), pages 363-377.
    • Handle: RePEc:eee:pacfin:v:20:y:2012:i:3:p:363-377
    DOI: 10.1016/j.pacfin.2011.11.002
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    References listed on IDEAS

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    More about this item

    Keywords

    China; Corporate philanthropy; Event study; Strategic investment; 2008 earthquake;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G19 - Financial Economics - - General Financial Markets - - - Other
    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other

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