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Journal of Business Ethics

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01-06-2015

Political Connection, Ownership Structure, and Corporate Philanthropy in China: A Strategic-Political Perspective

Authors: Sihai Li, Xianzhong Song, Huiying Wu

Published in: Journal of Business Ethics | Issue 2/2015

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Abstract

This paper investigates whether philanthropic giving decisions and amount of charitable giving are related to firms’ political connections and ownership type. To this end, Chinese firms listed on either the Shenzhen or Shanghai stock exchange between 2004 and 2011 are examined, where government interference in the business sector is prevalent, state ownership structure is dominant, and corporate political connections prevail. Our analyses show (1) a significant and positive relationship between political connections and the likelihood and extent of firm contributions; (2) a significant and negative relationship between state ownership and extent of firm contributions; and (3) a stronger relationship between political connections and corporate philanthropy in non-state-owned firms. These findings with regard to the relationship between corporate giving, political connections, and ownership type have important implications for understanding corporate giving behavior in China and in emerging markets in general.

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Data are available on the website: http://www.charity.gov.cn.

Data for China are from the website: http://www.charity.gov.cn; data for the United States are from the website: http://www.charitynavigator.org; and data for Australia are from the website: http://www.dss.gov.au.

The document is available on the SASAC website: http://www.sasac.gov.cn.

The document is available on the website of the SASAC of Tianjin Municipal People’s Government: http://www.tjsa.gov.cn/.

China Securities Regulatory Commission: http://www.csrc.gov.cn.

The official listed firm information-disclosure website appointed by CSRC is cninfo.com.cn.

In the 2008 tax reform, the corporate tax rate was reduced from 33 to 25 % and the limit of charitable deductions was lifted from 3 to 12 % of a firm’s taxable income.

The results are not presented, but are available upon request.

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Title: Political Connection, Ownership Structure, and Corporate Philanthropy in China: A Strategic-Political Perspective
Authors: Sihai Li
Xianzhong Song
Huiying Wu
Publication date: 01-06-2015
Publisher: Springer Netherlands
Published in: Journal of Business Ethics / Issue 2/2015
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-014-2167-y

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