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Corporate Philanthropy in China: A Case of Doing Well by Doing Good?

Listed author(s):
  • Zhong Qin
  • Minghuan Huang
  • Wenli Cheng

Based on panel data of 1891 Chinese listed companies over the period 2008-2013, we find a positive correlation between the companies’ philanthropic giving and their ability to obtain bank loans in the subsequent year. This result suggests that corporate philanthropy can be usefully seen as an investment in cultivating good relationships with the government and that the investment return comes in the form of better access to government-controlled financial resources. Thus regardless whether or not the companies were motivated by altruistic considerations, their philanthropic giving was in fact (handsomely) rewarded. In this sense, corporate philanthropy in China seems to be a case of doing well by doing good.

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File URL: http://www.buseco.monash.edu.au/eco/research/papers/2014/4614philanthropyqinhuangcheng.pdf
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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 46-14.

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Length: 25 pages
Date of creation: Oct 2014
Handle: RePEc:mos:moswps:2014-46
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Department of Economics, Monash University, Victoria 3800, Australia

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Web page: http://business.monash.edu/economics
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  1. 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.
  2. Navarro, Peter, 1988. "Why Do Corporations Give to Charity?," The Journal of Business, University of Chicago Press, vol. 61(1), pages 65-93, January.
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  4. Graff Zivin Joshua & Small Arthur, 2005. "A Modigliani-Miller Theory of Altruistic Corporate Social Responsibility," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-21, May.
  5. Leuz, Christian & Oberholzer-Gee, Felix, 2006. "Political relationships, global financing, and corporate transparency: Evidence from Indonesia," Journal of Financial Economics, Elsevier, vol. 81(2), pages 411-439, August.
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  7. MARA FACCIO & RONALD W. MASULIS & JOHN J. McCONNELL, 2006. "Political Connections and Corporate Bailouts," Journal of Finance, American Finance Association, vol. 61(6), pages 2597-2635, December.
  8. Bryan W Husted & David B Allen, 2006. "Corporate social responsibility in the multinational enterprise: strategic and institutional approaches," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 838-849, November.
  9. Goss, Allen & Roberts, Gordon S., 2011. "The impact of corporate social responsibility on the cost of bank loans," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1794-1810, July.
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  11. Jun Su & Jia He, 2010. "Does Giving Lead to Getting? Evidence from Chinese Private Enterprises," Journal of Business Ethics, Springer, vol. 93(1), pages 73-90, April.
  12. Klaus-Michael Menz, 2010. "Corporate Social Responsibility: Is it Rewarded by the Corporate Bond Market? A Critical Note," Journal of Business Ethics, Springer, vol. 96(1), pages 117-134, September.
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