Profit Maximisation vs. Agency: An Analysis of Charitable Giving by UK Firms

Posted: 29 Feb 2008

See all articles by Stephen J. Brammer

Stephen J. Brammer

University of Bath - School of Management

Andrew Millington

University of Bath - School of Management

Date Written: July 2005

Abstract

The charitable giving of a large sample of publicly quoted UK firms is analysed within a model that explores the profit maximisation and managerial utility enhancement motives for giving. The empirical method draws a distinction between the decision to participate in giving and the determination of the amount of corporate contributions. Firm size and advertising intensity are found to be positively associated with the probability of participation in giving. Stricter corporate governance and the rate of directors` remuneration are negatively related to the probability of participation. Among givers, the rate of giving is related positively to R&D intensity, the rate of directors` remuneration, and corporate profitability and negatively to firm indebtedness.

Keywords: Corporate social responsibility, Charitable giving

Suggested Citation

Brammer, Stephen and Millington, Andrew, Profit Maximisation vs. Agency: An Analysis of Charitable Giving by UK Firms (July 2005). Cambridge Journal of Economics, Vol. 29, Issue 4, pp. 517-534, 2005. Available at SSRN: https://ssrn.com/abstract=904477

Stephen Brammer (Contact Author)

University of Bath - School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom
01225 826826, ext. 5685 (Phone)

Andrew Millington

University of Bath - School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom
+44 (0) 1225 383068 (Phone)

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