The Empirical Analysis Of The Factors In Corporate Philanthropy And Financial Performance

Corporate philanthropy has become a way to increase profit, gain customers'loyalty, improve employees' morale as well as set up a close relationship with local community for years. There are several different ways to for corporations to donate and the amount of donation varies from company to company. We will divide our paper for two parts in order to study corporate philanthropy.The first part is theory study. We will give a thorough look into the past studies to find out the motive and effect of corporate philanthropy. The conclusion of research proves that, (1) The motive of corporate philanthropy; (2) The donation is affected for several factors; (3) The financial performance is up to the stakeholders' agreement; (4) The way of research is varied a lot. We need to focus on the psychology factor of donations, and the outside situation factor of corporations in the future study.The second part is empirical research. In order to observe the factors of corporate philanthropy and the financial consequences, we pick Chinese public companies to conduct the empirical research.The research shows that:(1) Corporations'slack resources, such as profit level and cash flow don't significantly affect the decision of donation when facing the earthquakes; (2) The amount of donation is affected by economic factor, especially operation cash flow; (3) The value of corporations does not significantly mediate the relation between corporation cash flow and corporate philanthropy; (4) Corporate philanthropy has positive effect on corporation's financial performance, which is in accord with strategic philanthropy. (5) The public Credibility of corporate philanthropy has some mediate effect on the relation between corporate philanthropy and financial performance. Besides, we also find out that the larger size of the corporation, the more probability that they will donate and the more they will donate. Also, local corporations (Sichuan corporations) donate more than others; the state owned corporations normally donate more than private owned corporations.