Research On The Impact Of Charitable Donations On Financial Performance

In the distribution field,there are a total of three distributions.The primary distribution is mainly completed by the market mechanism,and efficiency is emphasized,and the distribution is based on the contribution of the factors of production to the national income.Secondary distribution is mainly based the taxation and social insurance systems which is controlled by the government.The third distribution is mainly the supplement to the first two distributions,and it is based the voluntary principles.The third distribution distributes social resources and social wealth by mobilizing social forces,establishing social assistance,non-governmental donations,volunteer behaviors,and other ways.It has great significance to the social gap and the realization of a more reasonable income distribution system.With the rapid development of global philanthropy,corporate charitable donations have become increasingly influential.With the establishment and improvement of the socialist market economic system in China,and the limited financial resources of the government,charitable donations are playing an increasingly important role in social welfare undertakings.At present,many scholars at home and abroad have studied the impact of corporate charitable contributions on financial performance.Research on this topic has greatly helped the development of charity and corporate governance.The history of charitable donations in Western developed countries is longer,and all kinds of research theories are more abundant.Western corporate charitable donations are more mature and sustainable than Chinese corporations.Although the philanthropy of Chinese enterprises started late but developed rapidly,it is currently in a period of rapid development.The year of 2008,it was also known as China's first year of public welfare.Since 2008,China's charity has accelerated development.At present,China needs more theoretical guidance on charitable donations in order to better play the role of charitable donations.With regard to the relationship between charitable donations and financial performance,scholars at home and abroad have three different views on this: positive,negative,and irrelevant.This study is based on the theory of charitable donations and studies the relationship between the corporation charitable donations and financial performance.This research first reviews and sorts out the relevant literature,analyzes the theory of corporate charitable donations and financial performance,and proposes hypotheses and models based on theoretical guidance.This paper selects Shanghai and Shenzhen Stock Exchange A-share private listed companies which from 2012 to 2016 as the research object,collects the charity donation data and financial performance data from CSMAR,and then organizes the data into panel data for subsequent empirical analysis.On this basis,this paper takes financial performance as the dependent variable,charitable donation as independent variables,and measures the total assets at the end of the period,asset-liability ratio,sales expense ratio,and marketization degree as control variables,and the growth rate of owner equity as a regulatory variable.Then the research uses the panel data that has 504 samples which is collected by the STATA software,to conduct the empirical analysis of the relationship between charitable donations and property performance.The empirical results show that corporate charitable donations have a positive correlation effect on financial performance.However,the positive effect is not huge from the regression coefficient.In addition,a group of samples with higher cash ratios that corporate charitable donations have a greater positive effect on financial performance.Then we verified that corporate donations have a lagging role in financial performance,and the role of charitable donations takes time to produce greater impact.From the empirical analysis results,it can be seen that if charitable donations can be carried out in a stable and long-term manner,it is undoubtedly more conducive to improve financial performance.Finally,the research proves that the owner's equity growth rate plays a role in the adjustment of charitable donations and financial performance.In the daily business activities of enterprises,corporations have richer corporate resources and better capital accumulation capabilities which are in a period of better development capacity.In this case,companies are sufficient to meet the resources needed for normal operations and are more suitable for charitable donations.Through the above empirical analysis,this paper proposes that Chinese private enterprises should actively participate in philanthropy,incorporate charitable donations into corporate strategic management,and formulate stable and continuous charitable donation policies.A reasonable charitable donation will be more conducive to the development of the enterprise and achieve corporate and social development Win-win.In addition,there are many potential factors for the impact of corporate charitable donations on financial performance in China.In the future,China needs to continue to improve relevant laws and charitable donation policies,encourage enterprises to make charitable donations,and learn from the advanced experience of corporate charity donations from Western developed countries,which will make greater progress in the social public welfare undertakings China and the business development of enterprises.