The Impact Of Insurance Corporate Donations On Growth

Since China’s insurance business reopened in 1980,the insurance industry has expanded rapidly and developed vigorously.It once became one of the hottest industries in China as it was growing so fast.With the industry expanding quickly,the corporate social responsibility of insurance companies has also got the attention from society and operators.As a main way for insurance companies to fulfill CSR,corporate donations have played an important role in targeted poverty reduction,disaster relief,assistance for the disabled,and education.Insurance companies,considered as special financial institutions,are responsible for economic compensation,financing and social management.Insurance companies get a large amount of funds by collecting premiums.Stakeholders of insurance companies often pay more attention to how companies are using the money.Therefore,the response that insurance companies’ stakeholders give to the corporate donations is very different from that of general business enterprises.Based on this feature,this thesis believes that there is a correlation between the corporate donations of insurance companies and their growth which is worth analyzing.This thesis uses empirical research methods to explore the relationship between corporate donations and growth of insurance companies on the basis of related theories.First,based on the theory of principal-agent theory,stakeholder theory,and enterprise growth theory,it studies the influence mechanism of corporate donations on the growth of insurance companies.Second,based on the panel data of 16 property insurance companies from 2014 to 2019,a GMM dynamic panel regression model was established to study the relationship between corporate donations and growth of insurance companies,and to further examine the moderating role of stakeholder satisfaction.In order to ensure the robustness of the conclusions,this thesis also applies the instrumental variable and uses 2SLS for regression to solve endogenous issues.This thesis mainly focuses on property insurance companies,because with more long-term policies life insurance companies have greater cost of new business,and the growth of life insurance companies is obviously at a loss operation.Compared with life insurance companies,the growth of property insurance companies can be easily reflected on the financial indicators in time.The research results show that: First,insurance corporate donations are negatively correlated with growth,which means insurance corporate donations will show a decline in growth.Second,there is a significant moderating effect from stakeholder satisfaction to decrease the negative effect that corporate donations bring.In terms of shareholders,customers,employees and government,it is found that increasing the satisfaction of shareholders,employees and government can reduce the negative impact of corporate donations on growth but not for customers.It shows that in the case of a high degree of stakeholder satisfaction,corporate donations are easier to obtain support from shareholders,employees and the government,and the corporate donations supported by stakeholders will reduce the negative impact on growth.The conclusions have significant reference for insurance companies to carry out donation activities.Insurance companies are different from companies that directly connect with consumers.The particularity of insurance business makes it difficult for insurance companies to directly motivate consumers to purchase more products and services through corporate donations.Insurance companies should carefully consider whether to make donations and the amount of donation based on the status and business development.Also,the management should fully consider whether donations match the stakeholder satisfaction and perform charitable responsibilities on the basis of the economic responsibilities to stakeholders,so as to reduce the negative impact of corporate donations on growth.In addition,the conclusions provide a reference for government to guide insurance com panies to make donations.Legislation or planning for insurance corporate donations should be varied with the actual growth,willingness and ability of donations.And an official information disclosure system of insurance corporate donations should be constructed to enhance trust from the public and a well-functioned institutional environment for insurance companies to participate in charitable undertakings is also necessary.