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Forthcoming, Journal of Corporate Finance (2006)
BibTeX
@MISC{Brown06forthcoming,journal,
author = {William O. Brown and Eric Helland and Janet Kiholm Smith},
title = {Forthcoming, Journal of Corporate Finance},
year = {2006}
}
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Abstract
We study corporate philanthropy using an original database that includes firm-level data on dollar giving, giving priorities, governance, and managerial involvement in giving programs. Results provide some support for the theory that giving enhances shareholder value, as firms in the same industry tend to adopt similar giving practices and firms that advertise more intensively also give more to charity. But much of our evidence indicates that agency costs play a prominent role in explaining corporate giving. Firms with larger boards of directors are associated with significantly more cash giving and with the establishment of corporate foundations. Consistent with effective monitoring by creditors, firms with higher debt-to-value ratios give less cash to charities and are less likely to establish foundations. The empirical work considers the impact of industry regulation on giving and controls for state philanthropy laws and fiduciary responsibility laws.
Keyphrases
corporate finance corporate foundation original database fiduciary responsibility law agency cost state philanthropy law managerial involvement debt-to-value ratio effective monitoring corporate philanthropy prominent role empirical work enhances shareholder value industry regulation firm-level data
