A Study On The Insurance-like Effect Of Corporate Philanthropy Donation

In recent years, Corporate Social Responsibility has become a hot issue, and has caused social concern.People have higher requirements on corporations about their social responsibility performance, more and more enterprises have joined the corporate social responsibility movement. However, unlike NGOs, the nature of firms are gaining profits to live and develop. Therefore, more and more enterprises begin to change the traditional ideas, they combine social responsibility with business strategy plan, change the altruistic acts of charity alone into the strategic philanthropy.Overall, the charity donation is the main form of CSR, included in the enterprise’s operating expenses. Despite the controversy, a large number of domestic and foreign research results show that, the corporate philanthropy can promote corporate performance.However, the previous researches always focus on whether corporate philanthropy can promote the enterprise value, and the result has been a consensus of the community, but few attention has payed on whether corporate philanthropy can undertake insurance function under the event of a crisis, that is to protect the value of the enterprise and reduce loss. Although some scholars have studied on it, but there are still some problems. First of all, foreign scholars have researched on this topic for a period of time, but the domestic academia is still in the preliminary stage of exploration and lack enough theory; secondly, most of the former research backgrounds are confined to a single industry or enterprise crisis event, This paper’s background is China, we explore under such a unique situation, when crisis happens, whether the affected enterprises can mitigate value lose through the charitable donation, and how does stakeholders’information screening work during the process,besides, the thesis explores the moderating roles of the different event characteristics and enterprise characteristics.This thesis mainly uses the event study method, researches 26 crisis events during 2004--2014, and finally gets the following conclusions:In the event of a crisis, corporate philanthropy could be screened by stakeholders,so it is very significant in showing the role of insurance-like protection, if enterprises carries out charitable donations, their cumulative abnormal return will decline smaller than others; some kinds of information are moderated during the screening and deciding process:when the events are related to integrity of they can be controlled, the role of insurance will be weak; and if media pays more attention on the event and the main business of the enterprises are the same or similar with crisis events, the insurance-like protection will be stronger; besides, if the main business have closely contact with our body, the role of insurance corporate philanthropy is weak.Through theoretical and empirical analysis, the thesis puts forward some advice about enterprise charity:from the perspective of government and society, they should encourage enterprises to carry on charitable donations, to expand the proportion of corporate charitable donations; from the corporations’point of view, firstly, they should be law-abiding, try to innovate,make some of its information publicly, decrease the possibility of adverse selection, and comply with the social moral system, response to the call of the government, in the spare time, they should actively fulfill charitable responsibility, to get a win-win situation about the pursuit of enterprise interest and social effect, it’s every single person’s duty to strive to build a harmonious society.