Does giving always lead to getting? Evidence from the collapse of charity credibility in China

Yaosong Liu, Min Zhang, Tingting Ye and Yue Zhang

Pacific-Basin Finance Journal, 2019, vol. 58, issue C

Abstract: Research on the relationship between corporate philanthropy and performance has largely been inconclusive. Taking advantage of the Chinese Red Cross corruption scandal in 2011 which aroused widespread suspiciousness and mistrust towards Chinese philanthropic organizations, this study investigates the role of charity credibility in shaping philanthropy-performance association. The results indicate that the collapse of charity credibility significantly mitigates the positive association between corporate philanthropy and performance, offering insight into the ambiguous relationship between giving and getting. Moreover, corporations cut down their donation expenditure in response to the charity credibility crisis. The findings are robust to a battery of sensitivity tests. In addition, the impact of credibility collapse is more pronounced in regions where charity credibility suffered more and in firms with private ownership. Our study extends the extant literature by investigating the relationship between corporate social and financial performance from the perspective of charity credibility for the first time. Furthermore, by finding a dramatic decline in corporate donations after the collapse of charity credibility, the study highlights the necessity for the nonprofit sector to enhance governance and improve transparency.

Keywords: Corporate philanthropy; Financial performance; Charity credibility (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X18304207
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:58:y:2019:i:c:s0927538x18304207

DOI: 10.1016/j.pacfin.2019.101207

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().