The Research On The Relationship Among The Ultimate Controlling Shareholder, The Institutional Environment And The Corporate Philanthropy

As an important way of corporate social responsibility, corporate philanthropy can not only increase social welfare, but also foster a good corporate image and moral value. It is a strategic tool to enhance reputation and obtain competitive advantage. More attention is being paid to the research on the corporate philanthropy by theoretical and practical circles.Among the factors which influence the corporate philanthropy, existing researches conduct from organizational level, individual level and social level. During the influencing factors on the organizational level, most scholars carry on their researches from the angle of corporate governance. However, the researches focus on the surface of the corporate governance, such as board characteristics, share proportion held by management, nature of ownership and so on. The researches ignore the ultimate controlling shareholder who has the largest voting rights, weakening the accuracy of conclusions. This paper, being based on the difference of ultimate controlling shareholders, studies the relationship between the ultimate controlling shareholder and corporate philanthropy, and also considers the special institutional environment in China. Therefore, the paper overcomes the limitation of the existing researches which explore the surfacing factors, and analyzes the influencing factors of corporate philanthropy deeply.The paper includes 4668 listed companies in Shanghai and Shenzhen A-share markets during 2010 and 2012, and tests the relationship between the nature of property right, cash flow rights, separation of two rights, control level and the corporate philanthropy, and examines the moderating effect of the institutional environment in the relationship between the nature of property right and corporate philanthropy. The paper draws three main conclusions in total. Firstly, the nature of property right has a great influence on corporate philanthropy, and the non-governmental listed companies donate more money than the governmental listed companies. Secondly, the relationship between the nature of property right and corporate philanthropy is moderated by the institutional environment. Thirdly, cash flow rights, separation of two rights and control level have a great influence on ultimate controlling shareholders’ motivations, and then affect the corporate charity behavior. Specifically, cash flow rights are positively related to the corporate philanthropy in the non-governmental listed companies. Separation of two rights and control level are both negatively related to the corporate philanthropy.