Political Connection, Corporate Philanthropy And Corporate Financial Performance

Along with the advance of social civilization，the charity is attracting more and moreattention as a part of social responsibility.As an principal part in charity activities，privateenterprises plays a more and more important role.In order to explore the relationship betweenpolitical connection of private enterprises and corporate philanthropy,corporate philanthropyimpact on corporate financial performance，we conducted the following research.The first part is theory research.Firstly we use the literature analysis method to look intopast studies about the motive and the factors of corporate philanthropy and corporate financialperformance.The conclusion of research proves that，(1)The motivation of corporatephilanthropy including altruism， selfish, and mutual benefit；(2) The influencing factors ofcharity including political system， enterprise culture， enterprise size and asset-liabilityratio， etc；(3)Corporate financial performance is up to stakeholders’recognition.The second part is empirical research.In order to observe the influence of politicalconnections to the level of corporate philanthropy，the level of corporate philanthropy effectson corporate financial performance;and compared with no political relationships enterprises，whether private enterprises with political connections have more significantly influence oncorporate financial performance.We conducted empirical research based on the private listedcompanies.We did this for tow reasons.Firstly in recent years， private enterprises are farmore than the state-owned enterprises in quantity of company and amount ofdonations.Secondly，because of political relationship，state-owned enterprises can get morebenefits on the resource，the reason of donation is national appointment which doesn’t accordwith the purpose of this study.The research found that，(1)Political connections of privateenterprises has positive effect on corporate philanthropic；(2)corporate philanthropic ofprivate listed companies has positive effect on corporate financial performance whichhappened next several years；(3)Compared with no political connections of privateenterprises，private companies had donated only had positive effect on corporate financialperformance which happened next year.Besides，we also find out that the larger size ofcompany，the more they will donate，then the better corporate financial performance which happened next several years.The higher asset-liability ratio of company，the lower they willdonate，then the worse corporate financial performance which happened next several years.