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Journal of Business Ethics

Erschienen in:

24.05.2016

Corporate Philanthropy, Reputation Risk Management and Shareholder Value: A Study of Australian Corporate giving

verfasst von: Kate Hogarth, Marion Hutchinson, Wendy Scaife

Erschienen in: Journal of Business Ethics | Ausgabe 2/2018

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Abstract

This study examines the role of corporate philanthropy (CP) in the management of reputation risk and shareholder value of the top 100 ASX listed Australian firms for the 3 years 2011–2013. The results of this study demonstrate the business case for corporate philanthropy and hence encourage corporate philanthropy by showing increasing firms’ investment in corporate giving as a percentage of profit before tax, increases the likelihood of an increase in shareholder value. However, the proviso is that firms must also manage their reputation risk at the same time. There is a negative association between corporate giving and shareholder value (Tobin’s Q) which is mitigated by firms’ management of reputation. The economic significance of this result is that for every cent in the dollar the firm spends on corporate giving, Tobin’s Q will decrease by 0.413 %. In contrast, if the firm increase their reputation by 1 point then Tobin’s Q will increase by 0.267 %. Consequently, the interaction of corporate giving and reputation risk management is positively associated with shareholder value. These results are robust while controlling for potential endogeneity and reverse causality. This paper assists both academics and practitioners by demonstrating that the benefits of corporate philanthropy extend beyond a gesture to improve reputation or an attempt to increase financial performance, to a direct collaboration between all the factors where the benefits far outweigh the costs.

Vorheriger Artikel The Impact of Corporate Social Responsibility on Risk Taking and Firm Value

Nächster Artikel Neither Principles Nor Rules: Making Corporate Governance Work in Sub-Saharan Africa

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This explains why this research found many Australian firms reluctant to report a definitive figure of corporate giving.

The Durbin–Wu–Hausman (DWH) test which determines whether there is no endogeneity in the equation (null hypotheses). The significant DWH tests (F (1, 681); p = 0.0000) indicate that endogeneity is present in the OLS estimates and the instruments have corrected for it.

Examples such as companies are praised for their action, or an award, monetary or other kind of donation etc.

Examples such as companies are criticized for action etc.

We purchased this data from a UK firm that collects this information.

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Titel: Corporate Philanthropy, Reputation Risk Management and Shareholder Value: A Study of Australian Corporate giving
verfasst von: Kate Hogarth
Marion Hutchinson
Wendy Scaife
Publikationsdatum: 24.05.2016
Verlag: Springer Netherlands
Erschienen in: Journal of Business Ethics / Ausgabe 2/2018
Print ISSN: 0167-4544
Elektronische ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-016-3205-8

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