The Research Of Market Reactions To Corporate Philanthropy Disaster Response

With the development of the world economy, companies are developing as the important role of market-oriented economy. The aim of companies nowadays is not just the maximum of profit,but also the bearer of social responsibility and the lead of piblice image. As the emergeingg of corporate social responsibility theory, the study focus on the corporate philanthropic disaster response is highlight. When confronted in the catastrophic events, the donation of corporate is becoming more and more important.For example, among the relieve efforts to Hurricane Katrina in 2005, one third of the donation came from the corporate. As well as the Sichuan Earthquake in China, the donation value from companies was beyond 100 billion. We can say, the corporate social responsibility activities is in full swing.However, it is uncertain that such corporate social responsibility activities will benefit companies themselves or just the generous giving base on social justice. The literature on strategic philanthropic suggests that such donation behaviour will add to value because it can generate direct and indirectl benefits to the corporate. But we can not decide how the investor interpret the corporate social responsibility as we expect. In order to inspect and verify it, we analyse the donation announcement made by the listed companies afer the Sichuan earthquake. We also aim to find out how the different corporate social responsibility behaviour effect their market value by using empirical study. This article is trying to find the relations between the firm's donation announcement and their market value by the means of event study. The samples are from the listed companies who made donation announcements after the Sichuan earthquake in China. We aim to find out the the relationship between corporate philanthropy behaviour and their impact to the stock market through analysing the abnormal return of the companies who made donation after the earthquake. We use the Partner Donation, In-kind Donation onation,Long-term donation and Government Proportion to identify the strategy of donation, then we build up the model and use multiple regression to the influence of corporate philanthropy disaster response to both the abnormal return and the cumulative abnormal return.According to the study results, we find out:1)the average abnormal return of corporate who made donation is positive on the announcement day. Investor approve the corporate philanthropy disaster response and the market reaction is positive.2)Long-term restruction is considered the most strategic donation behaviour and have the great positive market reaction and duration, while the Partner Donation is perceived as the second strategic donation behaviour while the In-kind Donation has no effect. But in the following further analysis, the industry moderate the relationship between the In-kind Donation and the abnormal return. Corporate from certain industries while their products prove technology oriented has a positive market reaction,yet corporate from other industries has a negative market reaction.3)The philanthropy behaviour of corporate that is owned mainly by government is considered less strategic,and the market reaction is negative.