Corporate Philanthrophic Practices

35 Pages Posted: 25 Nov 2003

See all articles by William O. Brown

William O. Brown

University of North Carolina (UNC) at Greensboro

Eric Helland

Claremont McKenna College - Robert Day School of Economics and Finance; RAND

Janet Kiholm Smith

Claremont McKenna College - Robert Day School of Economics and Finance

Abstract

We study corporate philanthropy using an original database that includes firm-level data on dollar giving, giving priorities, governance, and managerial involvement in giving programs. Results provide some support for the theory that giving enhances shareholder value, as firms in the same industry tend to adopt similar giving practices and firms that advertise more intensively also give more to charity. But much of our evidence indicates that agency costs play a prominent role in explaining corporate giving. Firms with larger boards of directors are associated with significantly more cash giving and with the establishment of corporate foundations. Consistent with effective monitoring by creditors, firms with higher debt-to-value ratios give less cash to charities and are less likely to establish foundations. The empirical work considers the impact of industry regulation on giving and controls for state philanthropy laws and fiduciary responsibility laws.

Keywords: Corporate philanthropy, corporate governance, boards of directors, monitoring, agency costs

JEL Classification: G34, G38, K22, L51, M41

Suggested Citation

Brown, William O. and Helland, Eric A. and Smith, Janet Kiholm, Corporate Philanthrophic Practices. Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=472161 or http://dx.doi.org/10.2139/ssrn.472161

William O. Brown

University of North Carolina (UNC) at Greensboro ( email )

Bryan School of Business
PO Box 26165
Greensboro, NC 274026165
United States
336-256-0110 (Phone)

Eric A. Helland

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States
909-607-7275 (Phone)
909-621-8243 (Fax)

RAND ( email )

1776 Main Street
Santa Monica, CA
United States

Janet Kiholm Smith (Contact Author)

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States
909-607-3276 (Phone)

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