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Corporate giving and corporate financial performance: the S-curve relationship 

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Abstract

The relationship between corporate giving and corporate financial performance has remained inconclusive after decades of research. This study advances our understanding by contending that stakeholders may react differently to a firm’s various levels of corporate philanthropic giving. The relationship between corporate giving and firm performance could be better captured using an S-curve shape in that either a low or high level of corporate giving will reduce, while a moderate level of corporate giving will increase, firm performance. We further examine the moderating effects of firm ownership and regional development. We contend that stakeholders may have higher expectations for the social performance of state-owned enterprises (SOEs) versus private-owned enterprises (POEs), resulting in a lower performance effect for SOEs with the same amount of corporate giving. Similarly, stakeholders in developed regions are also likely to have higher expectations for corporate giving, leading to a lower performance effect for the same level of corporate giving. Analyses of listed firms in China during the period from 2003 to 2013 support our thesis.

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Notes

  1. ALRE: Arms’ length relational ethics.

  2. CSRE: Communal sharing relational ethics.

  3. Considering the pool of all stakeholders.

  4. Chen Guangbiao, the founder and Chair of Jiangsu Huangpu Recyling Resources Co., Ltd., often initiates charitable programs by himself. For example, he spent more than RMB100 million to found the “Huangpu Disaster Prevention and Mitigation Training Center” in 2009, just after the 2008 Sichuan earthquake. During the 2008 Sichuan earthquake relief, Chen led a group of about 120 employees to take part in the emergency interventions (e.g., finding and saving victims).

  5. The Marketization Index measures regional development by using five first-level indicators: government-market relations, development of non-state-owned economy, product market development, factor market development, and development of market intermediaries and legal system. Each first-level indicator further contains several second-level indicators.

  6. This was rightly pointed out by a reviewer.

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Acknowledgements

We would like to thank senior editor, Professor Ajai Gaur, and the anonymous reviewers for their constructive comments and suggestions. We are also grateful for the financial support from Natural Science Foundation of China (No. 71772071, No. 71372131, No.71402061).

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Authors and Affiliations

  1. School of Management, Huazhong University of Science and Technology, Wuhan City, Hubei Province, People’s Republic of China

    Yongqiang Gao

  2. College of Business, City University of Hong Kong, Kowloon, Hong Kong, China

    Haibin Yang

  3. HEC, University of Montreal, 3000 Côte Ste-Catherine, Montreal, QC, H3T 2A7, Canada

    Taïeb Hafsi

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Gao, Y., Yang, H. & Hafsi, T. Corporate giving and corporate financial performance: the S-curve relationship . Asia Pac J Manag 36, 687–713 (2019). https://doi.org/10.1007/s10490-019-09668-y

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