Corporate philanthropy: Insights from the 2008 Wenchuan earthquake in China

Gao, Fox, Faff, Robert and Navissi, Farshid (2012) Corporate philanthropy: Insights from the 2008 Wenchuan earthquake in China. Pacific-Basin Finance Journal, 20 3: 363-377. doi:10.1016/j.pacfin.2011.11.002

Author Gao, Fox
Faff, Robert
Navissi, Farshid
Title Corporate philanthropy: Insights from the 2008 Wenchuan earthquake in China
Language of Title eng
Journal name Pacific-Basin Finance Journal   Check publisher's open access policy
Language of Journal Name eng
ISSN 0927-538X
Publication date 2012-06-01
Year available 2011
Sub-type Article (original research)
DOI 10.1016/j.pacfin.2011.11.002
Volume 20
Issue 3
Start page 363
End page 377
Total pages 15
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Language eng
Formatted 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.

Highlights: ► The market reacts positively to the announcement of corporate donations. ► Impact is higher for companies involved in consumer oriented business. ► Donors in relatively concentrated industries realise higher abnormal stock returns.
Keyword China
Corporate philanthropy
Event study
Strategic investment
2008 earthquake
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Available online 25 November 2011.

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2012 Collection
UQ Business School Publications
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Citation counts: TR Web of Science Citation Count  Cited 12 times in Thomson Reuters Web of Science Article | Citations
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Created: Tue, 13 Mar 2012, 00:08:44 EST by Karen Morgan on behalf of UQ Business School