Valuation Effect of Emotionality in Corporate Philanthropy

Anh Dang () and Trung Nguyen ()
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Anh Dang: Northern Kentucky University
Trung Nguyen: East Carolina University

Journal of Business Ethics, 2021, vol. 173, issue 1, No 4, 47-67

Abstract: Abstract Despite receiving a great deal of research attention, the effect of corporate philanthropy on shareholder value remains inconclusive. To address this issue, the present paper examines emotionality as an important factor based on which investors infer about the firm’s motive as well as the beneficiary’s worthiness and react accordingly. Consistent with attribution theory, our event study shows that announcements with more emotional expressions are associated with higher cumulative abnormal stock returns and the effect is stronger when investor attention is greater. We further find that the positive interaction effect between emotionality and investor attention is more pronounced for scandal-free firms than for firms with corporate social irresponsibility (CSI). The empirical evidence remains consistent under various robustness tests. The paper concludes with implications for future research and managerial practices.

Keywords: Corporate social responsibility; Corporate philanthropy; Investor attention; Shareholder value; Emotions (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10551-020-04551-z

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