The Benefit of Frequent Corporate Philanthropy

Bingxuan Lin, Jianhua Liu, Rui Lu and Liang Sun

Abacus, 2023, vol. 59, issue 1, 411-436

Abstract: Applying behavioural economic theory, we argue that the frequency of philanthropic activity is important in determining corporate philanthropy's economic outcome. Using Chinese data from 2003 to 2016, we find that firms with more frequent philanthropic activities obtain more government subsidies than firms that only engage in one‐off charitable donations. Firms with better corporate governance, such as higher management ownership and more independent directors, are more likely to adopt a strategy of frequent donation. Furthermore, firms are more likely to be frequent donors when management or local government officers have a long tenure. Our findings provide insight into the giving process and suggest that firms can maximize the benefit of corporate philanthropy if they strategically consider the donation frequency and donation amount simultaneously.

Date: 2023
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