The Effect of Corporate Giving and Participation on Employee Performance and Performance Overstatement

Abstract

In this study, I investigate whether corporate giving and employee participation in the corporate-giving decision-making process affect employee performance and performance overstatement. I conducted a laboratory experiment in which an organization either (1) includes employees in the decision-making process regarding the beneficiary of corporate giving (participative corporate giving), (2) chooses the beneficiary alone (non-participative corporate giving), or (3) does not engage in corporate giving at all. The results demonstrate that participative corporate giving leads to higher employee performance than non-participative corporate giving and no corporate giving. Regarding performance reporting, employees overstate the least if an organization implements participative corporate giving. Non-participative corporate giving neither increases employee performance nor does it decrease performance overstatements as compared to no corporate giving. Collectively, these findings suggest that employee participation in the corporate-giving decision-making process is a useful measure that can be applied to increase employee performance and reduce performance overstatements.

Keywords: performance, performance reporting, corporate giving, corporate social responsibility (CSR), participation in decision-making, donations

JEL Classification: M