Disaster Relief, Inc.

76 Pages Posted: 9 Nov 2020 Last revised: 14 Nov 2020

See all articles by Hao Liang

Hao Liang

Singapore Management University - Lee Kong Chian School of Business; European Corporate Governance Institute (ECGI)

Cara Vansteenkiste

UNSW Australia Business School, School of Banking and Finance

Date Written: November 2, 2020

Abstract

We investigate the motivations and value implications of corporate philanthropy by exploiting a global sample of publicly listed firms from 45 countries that provide disaster-relief grants to affected communities. We argue that, while in general corporate philanthropy entails agency concerns, the saliency of large, attention-grabbing natural disasters amplifies the strategic benefits of donating.

We find that the returns from donating increase with disaster severity and become positive for firms that rely more on reputation and social image. Returns are also higher for countries with low government relief support, for medium-sized donations, and for in-kind donations. Overall, our results highlight the strategic role of corporate philanthropy, which can lead to net increases in firm value and societal welfare if the strategic benefits of donating are sufficiently large.

Keywords: Natural disasters, corporate philanthropy, shareholder value, strategic benefits, agency costs

JEL Classification: G32, G34, L21, M14

Suggested Citation

Liang, Hao and Vansteenkiste, Cara, Disaster Relief, Inc. (November 2, 2020). European Corporate Governance Institute – Finance Working Paper No. 709/2020, Available at SSRN: https://ssrn.com/abstract=3727329 or http://dx.doi.org/10.2139/ssrn.3727329

Hao Liang (Contact Author)

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

HOME PAGE: http://business.smu.edu.sg/faculty/profile/130396/LIANG-Hao

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Cara Vansteenkiste

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

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