Research Of The Effect Of Corporate Philanthropy On Financing Constraints

Capital is the blood of enterprise to survive and develop.However,corporate financing is facing greater pressure due to the influence of information asymmetry and transaction costs and other factors.So how to resolve corporate financing constraints becomes the focus of government,business and academia.Corporations often transfer information about the financial situation,development prospects and other positive aspects to the outside through the subjective behaviors in practice,in order to improve information asymmetry and resource environment and to ease financing constraints.With the development of society,corporate social responsibility and philanthropy are increasingly concerned by the community.The current researches hold that corporate philanthropy has positive effects such as improving the reputation of corporations,playing the role of advertising effect,enhancing the financial performance or social relationship capital.But the results of research on whether corporate charitable donations can ease financing constraints are few and not deep enough.Based on this,this paper discusses the effect of corporate philanthropy behavior on financing constraints,in order to make contributions to resolving corporate financing constraints.Firstly,this paper systematically reviews the domestic and foreign researches on corporate philanthropy and financing problems,and determines the effect of corporate philanthropy on financing constraints as the research object.Secondly,it combines the theoretical analysis and empirical research to conduct specific analyses.In the theoretical analysis of the paper,it takes information asymmetry and signal transfer theory,corporate social responsibility theory,stakeholder theory and resource dependence theory as foundation,analyzes the effect of corporate philanthropy on financing environment of enterprises from perspectives of the market and the stakeholders,then puts forward research hypothesis.In the empirical research of the paper,it uses A share companies from 2010-2015 in China’s securities market as the whole sample and the donation sample to test the hypothesis by the cash-cash flow sensitivity model.Then it analyzes the overall effect and the differences of mitigating effect under different ways of information disclosure,different industry and regional institutional environment.The research proves that corporate philanthropy helps enterprises ease financing constraints of enterprises.The level of corporate donation is negatively correlated with the degree of financing constraints.Further study finds that the mitigating effect is more obvious in donated corporations those disclose donation information in the form of CSR Report,are in the kind of sensitive industry of social responsibility and in a backward area of institutional environment.Finally,this paper proposes the suggestions from the government and the enterprise.The government should create a good external environment to help enterprises ease financing constraints through corporate philanthropy.Corporations should establish a modern financial concept to use the effect of corporate philanthropy on easing financing constraints.