Tax Burden,Charitable Donation And Enterprise Financing Constraint

In recent years,with the development of the socialist market economy,enterprise performance growing rapidly.However,enterprises exposed a lot of negative news like lack of corporate social responsibilities when they chasing their own economic interests.It lead a series of social resistance to the phenomenon of corporate image damage,reduced credit,stock prices fell,financing constraints and other issues.As the highest form of social responsibility,charitable donation can not only transmit the values and business strength of the enterprises,but also to the market with its good management and development prospects of the signal in order to obtain market consumers goodwill.At the same time,enterprises can reduce the free cash flowing by donation behavior and reduce the costs and information asymmetry,and thus ease the corporate financing constraints.Under the current economic system,enterprises are faced with varying degrees of tax burden,donation can overcome the "government failure" and "market failure" malpractice as a mean of the third distribution of social wealth.When the enterprise tax burden at a high level,in order to alleviate the problem of financing constraints,enterprises may be more motivated to choose to donate.This way can meet the social values,get a good reputation and then promote the increase in corporate value,ease corporate financing constraints.The paper choos 2008-2015 Shanghai and Shenzhen A-share market of listed companies as the research sample,this paper tries to test the relationship among tax burden,charitable donation and enterprise financing constraint.The results show that:(1)There is a negative relationship between the size of charitable donation and enterprise financing constraint,the more the donations,the lower the financing constraint.Whether or not it has political connection,the negative correlation between the charitable donation and enterprise financing constraint is significant.(2)This paper further examines the impact of the tax burden on the above relationship and finds that when the tax burden is at a low level,the mitigation effect of public donation on corporate financing constraints will be strengthened,which is more prominent in the non-political affiliated enterprises.The contributions of this paper are as follows:(1)The negative correlation between public welfare donation and corporate financing constraint is verified,and relevant literature about the economic consequences and financing constraints of existing public welfare donations are enriched.(2)With the current tax burden of Chinese enterprises as the background of this nationalconditions,this paper explores the relationship between charitable donation and corporate financing constraint,and further explores the relationship among the tax burden,charitable donation and enterprise financing constraint whether they have political connection or not.It broadens the research perspective of charitable donation,and provide a new direction for alleviating the financing constraints of enterprises.