Research On Motivation And Effect Of Corporate Philanthropy From Financial Perspective

With the continuous development of economic globalization, enterprises are faced with various challenges in order to survive in the fierce competition. Companies need not only scientific management and advanced technology, but also to learn positive social responsibility for social capital to enhance the competitiveness of enterprises. So the charitable donation is an important way of corporates to take the social responsibility grows up quickly and becomes a key way to configure the reputation and image of the brand intangible social resources. Foreign economists have a long-time study of corporate philanthropy, and many foreign companies set up foundations or other charitable organizations to handle corporate philanthropy affairs. However, the study of corporate philanthropy just begins in our country. Enterprises played important roles in the relief and reconstruction process when natural disasters suffered in recent years in our country. Why do enterprises participate in charitable donations? Is it for purely altruistic motives or selfish motives? Do charitable donations of enterprises impact on the current financial performance or corporate value? This paper of charitable donation of Enterprises study has important theoretical and practical significance.Combining normative and empirical research methods on the basis of sorting domestic and abroad literature on the charitable behavior of enterprises, this article sees the charitable donation of enterprises as a strategic corporate financial behavior from the financial point of view. We analyze the motivation of enterprises deeply and clarify the mechanism of corporate charitable donation affecting the financial performance and business value. This paper selects GEM and small and medium company board listed corporate donations data during2008-2012and uses empirical analysis of corporate charitable donation motives and effects on financial performance and corporate market value. This behavior of comprehensive and systematic study on small and medium enterprise charitable giving aims to provide theoretical guidance to our corporate charitable donations and enhance the level of philanthropy.This paper is divided into five parts, as follows:Chapter1:Introduction. This chapter introduces the research background, theoretical and practical significance, the main contents and structure of this paper, the method used and possible innovation.Chapter2:Literature review. In this part, it defines the concepts of charity, small and medium enterprises, and then reviews the related theories and domestic and abroad literature.Chapter3:Theoretical analysis of enterprises charitable donations motivation and financial performance. This chapter treats enterprises as the main object of study, sorts theory related about corporate charity motivations and relationship of corporate charitable donations and financial results, and analyzes the specific motivations of enterprises for charitable donations, as well as the impact on the financial results of the mechanism.Chapter4:Empirical study of enterprises charitable motives and financial performance. In this chapter, we choose the data listed on small and medium enterprise board and GEM from2008to2012period for the study sample, and use descriptive statistics, correlation and regression analysis to verify the three hypotheses proposed in this paper.Chapter5:Conclusions and policy recommendations. This chapter is divided into three parts. The first part analyzes the empirical results obtained in the previous chapter; second part makes some policy recommendations of enterprises charitable donations; The third part of this paper is to summarize the conclusions and findings, and lists some limitations of this study and the prospects for the future.Through theoretical analysis and empirical testing, the paper draws the following conclusions:(1)The charitable donation of enterprises is to improve the company’s reputation and access to advertising effectiveness of economic incentives. Thus Companies whose products in direct contact with consumers are more inclined to charitable donations compared to other companies;(2) Enterprises charitable donations and current financial performance measures showed a significant positive correlation between, that says actively reasonable behaviors not only enable companies to bear social responsibilities, but also to enhance the brand image and increase public satisfaction and trust, which leads to achieving a win-win of the social responsibility and financial performance.(3) In the capital markets, good corporate image will increase the goodwill and get public support. Charitable donations of companies will convey a positive signal to investors that the Enterprise has a good business prospects and financial strength, which enhances the company’s stock price and corporate value.The innovation of this article may have three points:(1) This article starts from a financial point of view to observe the behavior of small and medium corporates charitable donations, selects accounting indicators and market indicators to measure financial performance, which can more fully understand the impact of charitable donations on firm performance.(2) This paper selects Chinese enterprises listed on small and medium corporate board and GEM as study objects to analyze the motivation of participation in charity donation and impacts on corporate financial performance.(3) From the empirical design, this paper is different from the previous study which only analyzed data for one year, but analyzes the data for six consecutive years of related issues, hope to present a more comprehensive enterprise charitable donation in a relatively longer period of time to produce financial results.Limitations of this article focus on the following three areas:(1) The main difficulty of this article is to collect the enterprises donation data because it is not mandatory corporate disclosure, and some companies do not put charitable donations and other donations separate, which leads to data accuracy is affected.(2) This article only intercept of six years data,which compared to the development of the charity is still a relatively short period of time. If you want to draw more convincing conclusions, it may take a longer time span to build a time series, and then conduct relevant theoretical and empirical research.(3) Data in this article is only from small and medium copampy board and GEM without any other companies. If further consider other business that may give a more comprehensive and practical operational conclusions on this basis.(4) Due to my limitations of the theoretical and practical aspects, the policy research conclusions and recommendations maybe not sufficient or consummate, and the proposal is correct or not need for testing in the future practice. Overall, the study in the field of corporate charitable contributions is still in its infancy, and this article is just to try to analyze the relationship between enterprise charitable donations and financial performance. So, the direction of future research efforts of company charitable donation intrinsic motivation and the drive mechanism should be made from a multi-angle so as to continuously enhance and improve the level of theoretical research on charitable donations and to build a complete theoretical research framework.