Determinants of Corporate Philanthropy: A Case of Karachi Stock Exchange

Yıl 2017, Cilt: 9 Sayı: 1, 21 - 38, 03.04.2017

Uzma Bashir

https://doi.org/10.33818/ier.308565

Cited By: 3

Öz

Corporate Philanthropy (CP) has become increasingly
important as a means of filling gaps in the provision of social services using
Public-Private partnerships. Very little research exists on determinants and
motives of CP in Pakistan. This paper utilizes data from the 2001-2011 Annual
Reports  of 234 firms listed on the
Karachi Stock Exchange (KSE) to analyze the association of CP with different
firm specific factors like firm size, firm visibility, labor intensity, firm’s
financial position (measured as profitability, leverage, cash and equivalent
balance, and dividend payout), and the impact of natural disasters on CP.
Because this is the first study on this data set, we have employed exploratory
data analysis techniques and carefully consider the impact of outliers and
other non-standard features of the data. We have used Panel data analytic
techniques as well as the Tobit model to analyze the associations between
different firm specific factors and CP. We found that firm size, prior
profitability, and natural disaster have significant positive impact on CP. We
found no evidence that firms are using philanthropy for image creation.
Furthermore, exploratory data analysis shows that there are some clusters of
firms, which behave differently. Standard regression analysis techniques cannot
deal with such cases that require more sophisticated treatment.

Anahtar Kelimeler

Philanthropy, Firm Size, Natural Disaster, Cluster

Kaynakça

• Abzug, R. and N. J. Webb (1996). Rational and extra-rational motivations for corporate giving: Complementing economic theory with organization science. NYL Sch. L. Rev., 41, 1035.
• Adams, M. and P. Hardwick (1998). An analysis of corporate donations: United Kingdom evidence. Journal of Management Studies, 35 (5), 641-654.
• Afshar, T. (2012). Corporate Philanthropy in the UK and US: The impact of cycles, Strategy and CEO Succession (Doctoral dissertation, University of London).
• Amato, L. H. and C. H. Amato (2007). The effects of firm size and industry on corporate giving. Journal of Business Ethics, 72 (3), 229-241.
• Arulampalam, W. and P. Stoneman (1995). An investigation into the givings by large corporate donors to UK charities, 1979—86. Applied Economics, 27 (10), 935-945.
• Brammer, S. and A. Millington (2004). The development of corporate charitable contributions in the UK: A stakeholder analysis. Journal of Management Studies, 41 (8), 1411-1434. Brammer, S. and A. Millington (2006). Firm size, organizational visibility and corporate philanthropy: an empirical analysis. Business Ethics: A European Review, 15 (1), 6-18. Brammer, S. and A. Millington (2008). Does it pay to be different? An analysis of the relationship between corporate social and financial performance. Strategic Management Journal, 29 (12), 1325-1343.
• Brammer, S. and S. Pavelin (2006). Corporate reputation and social performance: The importance of fit. Journal of Management Studies, 43 (3), 435-455.
• Brown, M. S., Chin, W. H. and Rooney, P. (2004) Estimating Corporate Charitable Giving For Giving USA, Series, Research Report, Indiana University Center on Philanthropy.
• Brown, W. O., E. Helland and J. K. Smith (2006). Corporate philanthropic practices. Journal of corporate finance, 12 (5), 855-877.
• Campbell, D., G. Moore and M. Metzger (2002). Corporate philanthropy in the UK 1985–2000 some empirical findings. Journal of Business Ethics, 39 (1-2), 29-41. Carroll, R. and D. Joulfaian (2005). Taxes and corporate giving to charity. Public Finance Review, 33 (3), 300-317.
• Chai, D. H. (2010). Firm Ownership and Philanthropy. Centre for Business Research, University of Cambridge.
• Friedman, M. (1970). The Social Responsibility Of Business Is To Increase Its Profits. 217-223. Website. http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html (accessed Nov 12, 2013)
• Godfrey, P. C., C. B. Merrill and J. M. Hansen (2009). The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis. Strategic Management Journal, 30 (4), 425-445.
• Grullon, G., G. Kanatas and J. P. Weston (2004). Advertising, breadth of ownership, and liquidity. Review of Financial Studies, 17 (2), 439-461.
• Gujarati, D. N. (2009). Basic econometrics. Tata McGraw-Hill Education.
• Gupta, S. (1996). Taxes and corporate charity: empirical evidence from micro-level panel data. National Tax Journal, 49 (2), 193-213.
• Hillman, A. J. and G. D. Keim, (2001). Shareholder value, stakeholder management, and social issues: what's the bottom line? Strategic Management Journal, 22 (2), 125-139.
• Hsiao, C. (2003). Analysis of Panel Data (Econometric Society Monographs). Cambridge: Cambridge University Press.
• Hull, C. E. and S. Rothenberg (2008). Firm performance: The interactions of corporate social performance with innovation and industry differentiation. Strategic Management Journal, 29 (7), 781-789.
• Johnson, R. A. and D. W. Greening, (1999). The effects of corporate governance and institutional ownership types on corporate social performance. Academy of management Journal, 42 (5), 564-576.
• Makki, M. A. M. and S. A. Lodhi (2008). Determinants of corporate philanthropy in Pakistan. Pakistan Journal of Commerce and Social Sciences, 1, 17-24.
• McWilliams, A. and D. Siegel (2001). Corporate social responsibility: A theory of the firm perspective. Academy of management review, 26 (1), 117-127.
• Moore, G. and A. Robson (2002). The UK supermarket industry: an analysis of corporate social and financial performance. Business Ethics: A European Review, 11 (1), 25-39.
• Muller, A. and R. Kräussl (2011). Doing good deeds in times of need: A strategic perspective on corporate disaster donations. Strategic Management Journal, 32 (9), 911-929.
• Najam, A. (2007). Portrait of A Giving Community: Philanthropy by the Pakistani-American Diaspora. Harvard: Harvard University Press.
• Navarro, P. (1988). Why Do Corporations Give to Charity? The Journal of Business, 61(1), 65-93
• Orlitzky, M., F. L. Schmidt and S. L. Rynes (2003). Corporate social and financial performance: A meta-analysis. Organization studies, 24 (3), 403-441.
• Porter, M. E. and M. R. Kramer (2002). The competitive advantage of corporate philanthropy. Harvard business review, 80 (12), 56-68.
• Roberts, R. W. (1992). Determinants of corporate social responsibility disclosure: an application of stakeholder theory. Accounting, Organizations And Society, 17 (6), 595-612.
• Schnietz, K. E. and M. J. Epstein (2005). Exploring the financial value of a reputation for corporate social responsibility during a crisis. Corporate Reputation Review, 7 (4), 327-345.
• Seifert, B., S. A. Morris and B. R. Bartkus (2003). Comparing big givers and small givers: Financial correlates of corporate philanthropy. Journal of Business Ethics, 45 (3), 195-211.
• Seifert, B., S. A. Morris and B. R. Bartkus (2004). Having, giving, and getting: Slack resources, corporate philanthropy, and firm financial performance. Business and Society, 43 (2), 135-161. Thompson, J. K. and J. N. Hood (1993). The practice of corporate social performance in minority-versus nonminority-owned small businesses. Journal of Business Ethics, 12 (3), 197-206.
• Tilcsik, A. and C. Marquis (2013). Punctuated Generosity How Mega-events and Natural Disasters Affect Corporate Philanthropy in US Communities. Administrative Science Quarterly, 58 (1), 111-148.
• Tse, T. (2011). Shareholder and stakeholder theory: after the financial crisis. Qualitative Research in Financial Markets, 3 (1), 51-63.
• Ullmann, A. A. (1985). Data in search of a theory: a critical examination of the relationships among social performance, social disclosure, and economic performance of US firms. Academy of management review, 10 (3), 540-557.
• Van Beurden, P. and T. Gössling (2008). The worth of values–a literature review on the relation between corporate social and financial performance. Journal of Business Ethics, 82 (2), 407-424.
• Waddock, S. A. and S. B. Graves (1997). The corporate social performance. Strategic Management Journal, 8 (4), 303-319.
• Wang, H., J. Choi and J. Li (2008). Too little or too much? Untangling the relationship between corporate philanthropy and firm financial performance. Organization Science, 19 (1), 143-159.
• Williams, R. J. and J. D. Barrett (2000). Corporate philanthropy, criminal activity, and firm reputation: is there a link? Journal of Business Ethics, 26 (4), 341-350.