The Empirical Study On The Impact Of Corporate Donation On Stock Crash Risk

Around 2008 and 2015,China’s stock market experienced two periods of intense turbulence,with stock prices plummeting and crashing,which seriously damaged the interests of investors and shook their confidence in the capital market.The turbulence in the financial market affected the sustainable and healthy operation of enterprises and also affected the development of the real economy.At present,China’s capital market reform is accelerating comprehensively.Under the background of "registration system",market access conditions are relaxed and listed enterprises are mixed,which puts forward higher requirements for financial supervision.Some scholars focus on the relationship between the real economy and the stock market,hoping to study the influencing factors and prevention methods of stock crash risk from the perspective of micro enterprises.At the same time,in the past two years,with repeated outbreaks of COVID-19 and frequent disasters,corporate donations have become the focus of attention of all sectors of society.Enterprises are the mainstay of charitable donation in China.In 2020,their donations reached 121.811 billion yuan,exceeding 100 billion yuan for the first time.Although more and more enterprises participate in charitable donation,the motivation and economic consequences of corporate donation are different.In this context,this paper studies the impact of corporate donation on stock crash risk.Existing literature has carried out a large number of studies on corporate donation motivation and economic consequences,as well as the formation mechanism and influencing factors of stock crash risk.Some scholars also associate corporate social responsibility with stock crash risk,providing references for this paper.This paper explores the theoretical logic and internal mechanism of corporate donation affecting stock crash risk,and proposes that corporate donation may affect stock crash risk through three paths:supervision effect,resource effect and investor sentiment effect.Then this paper uses the panel data of A-share listed companies from 2008 to 2020 to conduct an empirical test through the fixed effects model.The regression results show that corporate donation can reduce stock crash risk,and the supervision effect,resource effect and investor sentiment effect are all valid.Corporate donation can strengthen the supervision function of external stakeholders,improve the quality of corporate information disclosure,and reduce the risk of stock crash.Corporate donation can also bring more government subsidies to enterprises,ease their financing constraints,reduce their operating risks and thus reduce the stock crash risk.On the other hand,investor optimism caused by corporate giving can obscure to some extent the effect of corporate giving on reducing the risk of stock crash.The above conclusions are still valid after modification of endogeneity and robustness test.This paper has carried on the extension research on this basis.By comparing corporate donation with other CSR commitments,it is found that the difference of their impact on stock crash risk is only that the investor sentiment effect of other CSR commitments is not significant.In addition,heterogeneity test is also used to find that the higher the media attention,the stronger the supervision effect of corporate donation,the lower the risk of stock crash.And enterprises with political connections are more likely to obtain government subsidies through donations.Enterprises with high network centrality of independent directors are more likely to give full play to their social network advantages,improve operating efficiency and prevent operating risks,thus reducing the risk of stock crash.Donations from loss-making enterprises are more likely to induce optimism among investors and increase the risk of stock crash.The performance of other CSR does not have a moderating effect on investor sentiment effect,which reflects that the reaction of investor sentiment to corporate donation is more based on the perspective of financial rather than the perspective of CSR,and investors pay little attention to the motivation of corporate donation.The research shows that under the combined effects of supervision,resource and investor sentiment,corporate donation can indeed reduce stock crash risk,and this effect varies with media attention,enterprise resource endowment and enterprise operating status.Based on the above research conclusions,this paper provides targeted suggestions for enterprises,investors and regulatory authorities,hoping that enterprises can make reasonable donation decisions based on their own capabilities and do well in information disclosure.Investors should make investment decisions based on rational thinking and comprehensive evaluation of corporate donation behavior and avoid blind optimism.The government,audit institutions and the China Securities Regulatory Commission should also play their respective roles and jointly maintain the smooth operation of the capital market and boost economic development.