Is Doing Good Good for You? Yes, Charitable Contributions Enhance Revenue Growth

36 Pages Posted: 16 Nov 2008

See all articles by Baruch Lev

Baruch Lev

New York University - Stern School of Business

Christine Petrovits

College of William and Mary - Mason School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: July 2006

Abstract

A key question concerning socially responsible corporate activities is whether such actions achieve traditional goals, such as profit maximization and shareholder value creation, or whether such activities represent a drain on resources by opportunistic managers. Much of the debate about the legitimacy of and justification for socially responsible activities would be settled if it is convincingly shown that they further traditional business goals. In this study we provide such evidence. Using a large sample of charitable contributions made by public companies from 1989 through 2000, and a statistical methodology that distinguishes causation from association, we document that charitable contributions enhance the future revenue growth of the donors. In particular, we find evidence that, for firms in industries that are highly sensitive to consumer perception, corporate giving is associated with subsequent sales growth. On the other hand, our results do not provide strong evidence that revenue growth drives future charitable giving.

Suggested Citation

Lev, Baruch Itamar and Petrovits, Christine, Is Doing Good Good for You? Yes, Charitable Contributions Enhance Revenue Growth (July 2006). NYU Working Paper No. BARUCH LEV-04. Available at SSRN: https://ssrn.com/abstract=1301330

Baruch Itamar Lev (Contact Author)

New York University - Stern School of Business ( email )

40 West 4th Street, Suite 400
New York, NY 10012
United States
212-998-0028 (Phone)
212-995-4001 (Fax)

HOME PAGE: http://www.baruch-lev.com

Christine Petrovits

College of William and Mary - Mason School of Business ( email )

P.O. Box 8795
Williamsburg, VA 23187-8795
United States

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