Research On The Effect Of Ownership Structure And Corporate Philanthropy

As public consumers are increasingly concerned about the implementation of corporate social responsibility,companies have recognized that the balance of profit maximization and corporate social responsibility cannot be excessively tilt.But in the era of mobile Internet,environmental pollution,food safety and other social problems spread in a speed and scope of exponentially,public consumers can immediately show their attitudes by commenting or buying a product or service directly,the urgency of the corporate social responsibility is higher and higher.However,the company is essentially a profit organization,it is difficult to find a balance between the pursuit of self-interest maximization and fulfill the social responsibility.At the same time,corporate social responsibility is not simply to meet the needs of the community,but also mixed with the possible rewards or benefits behind the behavior.Corporate philanthropy is one of the oldest forms of corporate social responsibility,and predecessors have already conducted an in-depth study of the complex motivations behind this behavior.By reviewing the literature,we find that the driving factors behind the corporate philanthropy can be divided into the environmental level,the enterprise level and the individual level,but most studies focused on the internal characteristics of the enterprise itself,such as governance structure,equity characteristics.With the development of academic studies,institutional environment and market environment of the enterprise also have been studied,but use these drivers to explain coporate philanthropy in the situation of China directly is still lacking.After all,such as inadequate marketization reform,state-owned property and other special factors are prevalent in the emerging economies of charitable giving.Therefore,we not only need to pay attention to the characteristics of internal ownership structure,but also need to combine the special background of China's economic transformation and the competitive situation of the industry to study the motives of corporate philanthropy in China.Based on the agent theory and institutional theory,this paper mainly study the influence of ownership structure(ownership concentration and equity nature)on the level of corporate philanthropy and introduce the degree of marketization and the degree of competition as moderators.Empirical analysis using data on Chinese firms listed on A-share stock exchanges from 2011 to 2015,this study draws some conclusions as follows.Firstly,ownership concentration has significant negative impact on the level of corporate philanthropy.In terms of corporate philanthropy,the interests of shareholders and managers are not equal.Managers can participate in corporate philanthropy to increase their influence by occupying redundant resources,which damage the wealth of shareholders.When the ownership of the enterprise is more concentrated,the shareholders can more effectively supervise the managers'decision-making and reduce the agency cost,thus restraining the self-interest behavior of the managers.Secondly,relative to the state-owned enterprises,the non-state-owned enterprises have higher level of charitable giving.Because the state-owned enterprises have a political advantage naturally,non-state-owned enterprises are facing great political uncertainty and they are urgent to participate in corporate philanthropy in order to establish contact with the government so that obtain political legitimacy and enterprise development resources.Thirdly,the relationship between ownership concentration and the level of corporate philanthropy become much stronger when the degree of marketization is higher.When the degree of marketization is high,the agency costs between shareholders and managers are becoming smaller because of a more perfect supervision mechanism.Furthermore,the strong financial strength of local governments can be fully involved in social affairs and reduce the opportunities for managers to earn benefits for themselves through philanthropy.The fourth conclusion has not been verified which consider that the non-state-owned enterprises have lower levels of corporate philanthropy than state-owned enterprises when the degree of marketization is high.It is possible for non-state-owned enterprises gradually make a progress from the practical legitimacy to the moral legitimacy and even cognitive legitimacy in the process of obtaining legitimacy as the improvement of the market environment.The next conclusion is that the relationship between ownership concentration and the level of corporate philanthropy become much stronger in the more competitive industry.When the industry competition is more intense,the agent between shareholders and managers are becoming smaller for some reasons.On the one hand,the redundant resources managers can freely take up are becoming less and less and competitive pressure force managers to be more loyal to their jobs at the same time.On the other hand,shareholders can use similar information from homogeneous enterprises to conduct a comprehensive performance evaluation of managers,thereby reducing the speculation of managers.Last but not least,the non-state-owned enterprises have lower levels of corporate philanthropy than state-owned enterprises in the more competitive industry mainly because the non-state enterprises are in an more urgent need for political resources priority when facing fierce competition.