Are Chinese Enterprises’ Charitable Donations "Political Contributions"?

As the representatives of the power, the government officials can change the financial regulation and the economic policy with legal authority. Therefore, the replacements of government officials have gradually get scholars’attention in recent years. At present, most scholars explore its influence on the region’s macroeconomic and companies’ investment decision. The author thinks that it would not only increase the companies’ uncertain risk, but also their opportunity in the new round of resource allocation. Would the companies establish the political relationship with charitable donations to benefit from it? This is the new problem we want to solve.Choosing the A-share listed companies in China during2006and2011as a study sample, we selected the local government transition (the replacement of municipal party secretary)as a new angle of view and empirically studied its influence on corporate charitable donations. Meanwhile we analyzed this influence in detail from the dimensions of companies’ characters of property rights, the last job locations of the new officials and the market levels of the cities. We have found that the scale and inclination of corporate charitable donations would increase when political uncertainty caused by the replacements of the officials occurred. By group testing, we have found this positive effect would be more obvious if the company was non-state, or the new official was from a different city, or the city’s market level was higher. After a further examination, we found the private enterprises would get more benefit in financing, government subsidies and investment opportunities. Therefore, we thought the corporate charitable donations as "Political Contributions" paid by companies to establish the political relationship and compete for the dominant position in the new round of resource allocation. We not only enriched the research on the politically motivation of corporate charitable donations, but also offered a new way to fully understand how Chinese companies deal with the risk and opportunities in an uncertain political environment caused by the local government transition.