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The Effects of Firm Size and Industry on Corporate Giving

  • Louis Amato
  • Christie Amato

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    Recent downward trends in corporate giving have renewed interest in the factors that shape corporate philanthropy. This paper examines the relationships between charitable contributions, firm size and industry. Improvements over previous studies include an IRS data base that covers a much broader range of firm sizes and industries as compared to previous studies and estimation using an instrumental variable technique that explicitly addresses potential simultaneity between charitable contributions and profitability. Important findings provide evidence of a cubic relationship between charitable giving and firm size and evidence of strong industry effects. The plus-minus-plus regression coefficient sign pattern for the cubic firm size model suggests that small and large firms give more relative to total receipts with lower giving ratios among medium size firms. One interpretation for this finding is that small firms are close to the communities they serve while high visibility creates a need for large firm philanthropy. Strong industry effects provide evidence of inter-industry differences in giving culture and/or different public relations requirements across industries. Copyright Springer Science+Business Media, Inc. 2007

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    File URL: http://hdl.handle.net/10.1007/s10551-006-9167-5
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    Article provided by Springer in its journal Journal of Business Ethics.

    Volume (Year): 72 (2007)
    Issue (Month): 3 (May)
    Pages: 229-241

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    Handle: RePEc:kap:jbuset:v:72:y:2007:i:3:p:229-241
    Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100281

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    1. Orace Johnson, 1966. "Corporate Philanthropy: An Analysis of Corporate Contributions," The Journal of Business, University of Chicago Press, vol. 39, pages 489.
    2. Shepherd, William G, 1972. "The Elements of Market Structure," The Review of Economics and Statistics, MIT Press, vol. 54(1), pages 25-37, February.
    3. Fisher, Franklin M & McGowan, John J, 1983. "On the Misuse of Accounting Rates of Return to Infer Monopoly Profits," American Economic Review, American Economic Association, vol. 73(1), pages 82-97, March.
    4. Roberts, Robin W., 1992. "Determinants of corporate social responsibility disclosure: An application of stakeholder theory," Accounting, Organizations and Society, Elsevier, vol. 17(6), pages 595-612, August.
    5. Schmalensee, Richard, 1985. "Do Markets Differ Much?," American Economic Review, American Economic Association, vol. 75(3), pages 341-51, June.
    6. Boatsman, James R. & Gupta, Sanjay, 1996. "Taxes and Corporate Charity: Empirical Evidence from Micro Level Panel Data," National Tax Journal, National Tax Association, vol. 49(2), pages 193, June.
    7. Boatsman, James R. & Gupta, Sanjay, 1996. "Taxes and Corporate Charity: Empirical Evidence from Micro-Level Panel Data," National Tax Journal, National Tax Association, vol. 49(2), pages 193-213, June.
    8. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
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