Value Relevance of Corporate Donations
25 Pages Posted: 6 Dec 2016 Last revised: 21 Mar 2019
Date Written: December 4, 2016
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: Suggested Citation