Research On The Motivation And Effect Of Charitable Donations Of Money-losing Enterprises

Charitable donation is the highest form of corporate social responsibility.It plays an important role in balancing regional differences,shortening the gap between urban and rural areas and the gap between the rich and the poor,and supplementing the social security system,becoming a hot topic in the academic circles.Enterprises are always the main force of philanthropy.According to the 2017-2019 China Charitable Donation Report,charitable donation of corporates,including many money-losing enterprises,accounted for more than 50%of the total charitable donations.It is understandable that profitable companies use unused resources to actively fulfill its social responsibilities.However,as a special group,money-losing companies have been in financial distress.Charitable donations would consume the resources of the company,weaken the solvency of the company,and make company with poor performance even more in dire straits.It can't help but raise questions: Why do money-losing companies still make charitable donations when they are in such a difficult situation? What kind of returns can charitable donation bring to money-losing companies? What is the effect of charitable donation of money-losing companies? Therefore,the author believes that it is necessary to pay attention to the motivation and effect of the abnormal behavior of loss-making companies.The article begins with an introduction to the research background,significance,content,structure,methods,and possible contribution points,treating money-losing companies as the research object,and then summarize the current research status and deficiencies about charitable donations of money-losing companies,government subsidies and investor confidence through literature review.Next,after defining the concepts on charitable donations,government subsidies,investor confidence,urnaround performance and business environment,the motivation and effect of charitable donation of money-losing companies are analyzed based on resource dependence theory,strategic philanthropy,stakeholders theory,signaling theory and theory of behavioral finance,and research hypotheses are proposed.The 2012-2019 Chinese A-share listed money-losing companies are selected as the research sample.After defining the relevant variables and establishing the model,the empirical test is carried out.The research shows that(1)charitable donation of money-losing companies is significantly positively correlated with government subsidies;(2)charitable donation of money-losing companies is significantly positively correlated with investor confidence;(3)charitable donation of money-losing companies has a significant role in promoting performance of losses reversal.In addition,the article further studies the influence of the nature of property rights and the business environment on the effect of charitable donations of money-losing companies.The results show that Compared with non-state-owned enterprises,the charitable donation behavior of state-owned enterprises has a more obvious role in promoting performance of losses reversal.In a high-level business environment,the charitable donation behavior of money-losing companies has a more significant role in promoting performance of losses reversal.Finally,based on the above research conclusions,corresponding policy recommendations are provided for the government,companies and the market.