Market Reaction Of Charitable Donation Behavior Of Listed Companies

Charity donation is one of the important ways for enterprises to fulfill their social responsibilities,especially in the event of various disasters.Previous research results show that when disasters such as earthquakes and tsunamis occur,enterprises’ charitable donation will bring significant market reaction,which is generally short-term and influenced by factors such as donation form,time and amount.This study takes corporate donation behavior during the COVID-19 epidemic as a typical case to study the market reaction of charitable donation behavior of listed companies.In this paper,the donation information released by all A-share listed companies is collected by hand,and the market reaction of corporate donation behavior is analyzed by event research method.In this paper,the effective donation information of 429 listed companies was collected,among which 241 donations came from company announcements and 188 donations came from news reports.According to statistics,55% of companies released donation information within two weeks after Wuhan was closed;273 listed manufacturing companies released donation information,and manufacturing was the industry that released the most donation information,among which 51 were listed pharmaceutical companies.In addition,99 enterprises in the sample donated materials,accounting for 23.03% of the sample.During the epidemic period,the total donations of all listed companies in China were 2.906 billion yuan,and the average donation amount of each enterprise was 6.77 million yuan.The total donation of manufacturing enterprises is 1.223 billion yuan,with an average amount of 4.48 million yuan;The highest average donation amount is from listed companies in the financial industry,with an average amount of 1.88 million yuan.The research results based on the event research method show that the donation behavior of listed companies during the epidemic period will bring obvious market reaction,and the accumulated excess returns are significantly positive,indicating that the donation information of donated enterprises during the epidemic period can bring positive market reaction to enterprises.At the same time,the market reaction of donation behavior of listed enterprises has certain heterogeneity.In a certain period of time,the accumulated excess returns of enterprises with late release of donation information are larger than those with earlier release,those with materials in donations are larger than those without materials.Through full sample regression analysis,it is found that in a short window period,the relative donation number of enterprises is significantly negatively correlated with the accumulated excess returns,indicating that the higher the donation ratio,the worse the market response.After adding the interactive items of long-term social responsibility and relative donation amount,the interactive items are significantly positively correlated with accumulated excess returns in a short window period,which shows that long-term better performance of social responsibility can increase market trust and improve market response to donation information.Finally,according to the conclusion of this paper,four suggestions are put forward for enterprises and social supervision.First,enterprises should actively fulfill their social responsibilities,and at the same time,pay attention to the donation information,including materials in donations,and choosing the proportion of donations reasonably,which will help enterprises get better market response.Second,enterprises should insist on fulfilling their social responsibilities for a long time,and issue corporate social responsibility reports and audit them in a timely manner,which is more conducive to enterprises’ donation behavior to obtain better market response.Third,the government can strengthen the publicity and guidance of social responsibility,and also encourage enterprises to actively fulfill their social responsibilities through tax incentives,thus forming a good atmosphere for enterprises to pay attention to and consumers to pay attention to.