Value Relevance of Corporate Donations

25 Pages Posted: 6 Dec 2016 Last revised: 21 Mar 2019

See all articles by Thomas St George

Thomas St George

Victoria University of Wellington

Noor Houqe

School of Accountancy

Tony van Zijl

Victoria University of Wellington - Faculty of Commerce and Administration

A.K.M. Waresul Karim

Saint Mary's College of California - Graduate Business Programs

Date Written: December 4, 2016

Abstract

This paper examines whether corporate donations have an impact on a firm’s market value. We analyse 52,199 firm year observations on companies from 42 countries between 1998 and 2014. The regression model used to investigate the value relevance of corporate donations is the Collins, Pincus, & Xie (1999) adaptation of the Ohlson (1995) model. Our analysis finds evidence that supports our hypothesis that corporate donations are value relevant, while controlling for firm specific variables. The evidence is robust to a range of robustness tests that include recognition of the effects of the GFC and differences in country size, stage of economic development, and the economic, institutional, and legal aspects of each country.

Keywords: Value relevance, corporate donations, philanthropy

JEL Classification: M14, M41, M48

Suggested Citation

St George, Thomas and Houqe, Muhammad Nurul and van Zijl, Tony and Karim, A.K.M. Waresul, Value Relevance of Corporate Donations (December 4, 2016). Pacific-Basin Finance Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2880094 or http://dx.doi.org/10.2139/ssrn.2880094

Thomas St George

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Muhammad Nurul Houqe (Contact Author)

School of Accountancy ( email )

New Zealand

Tony Van Zijl

Victoria University of Wellington - Faculty of Commerce and Administration ( email )

RH 606, Pipitea Campus, 6th Floor, Rutherford Hous
23 Lambton Quay
Wellington
Australia

A.K.M. Waresul Karim

Saint Mary's College of California - Graduate Business Programs ( email )

United States

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