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Corporate Philanthropy After Fraud Punishment: An Institutional Perspective

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  • Zhang, Lin
  • Xu, Yuehua
  • Chen, Honghui
  • Jing, Runtian

Abstract

This study examines corporate philanthropy in the context of corporate wrongdoing punishment in emerging markets. Building on institutional theory, we propose that in emerging markets, after being punished for fraudulent behavior by the government, which is collectively the largest institution, convicted firms tend to use corporate philanthropy as an institutional strategy to regain legitimacy. Using data of Chinese-listed firms that were punished for financial fraud in the ten years from 2004 to 2013, our findings show the subsequent growth of corporate philanthropy to be positively related to punishment severity. Furthermore, convicted firms’ media visibility, dominant state ownership, and national political appointment strengthen the effect of punishment severity on corporate philanthropy increase. Our institutional perspective offers new insights into why firms engage in corporate philanthropy after fraud punishment.

Suggested Citation

  • Zhang, Lin & Xu, Yuehua & Chen, Honghui & Jing, Runtian, 2020. "Corporate Philanthropy After Fraud Punishment: An Institutional Perspective," Management and Organization Review, Cambridge University Press, vol. 16(1), pages 33-68, February.
    • Handle: RePEc:cup:maorev:v:16:y:2020:i:1:p:33-68_5
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    Cited by:

    1. Samuel Adomako & Mai Dong Tran, 2024. "Beyond profits: The linkages between local embeddedness, social legitimacy, and corporate philanthropy in the mining industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 555-565, January.
    2. Zhong, Xi & Chen, Weihong & Ren, Ge, 2022. "The impact of corporate social irresponsibility on emerging-economy firms’ long-term performance: An explanation based on signal theory," Journal of Business Research, Elsevier, vol. 144(C), pages 345-357.
    3. Gong, Rong, 2024. "Does Rivals’ product recall increase Firm’s product related corporate social Responsibility?," Journal of Business Research, Elsevier, vol. 170(C).
    4. Cai, Wenjing & Cai, Xinni & Wang, Zehao & Yang, Ge, 2023. "The spillover effect of penalty against peer firm leaders——Evidence from earnings management," Finance Research Letters, Elsevier, vol. 54(C).
    5. Zhe Ouyang & Qian Sun & Yang Liu, 2024. "The impact of investor reaction to crisis events on corporate philanthropy: evidence from Chinese firms," Asian Business & Management, Palgrave Macmillan, vol. 23(1), pages 139-163, February.
    6. Zhe Ouyang & Xiaojiao Wang & Yang Liu, 2024. "The use of corporate social responsibility in response to product‐harm crisis: How do stock market reactions matter?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3081-3097, July.
    7. Ruijie Jin & Helen Wei Hu, 2024. "Liability of Ownership Origin, Corporate Philanthropy, and Desire for Control in Chinese Family Firms," Entrepreneurship Theory and Practice, , vol. 48(3), pages 763-787, May.
    8. Xie, En & Li, Fanshu & Wu, Zhan & Kumar, Vikas, 2024. "State ownership and Chinese private firms’ OFDI in developed economies," Journal of World Business, Elsevier, vol. 59(3).
    9. Chenhao Hu, 2023. "The dual role of state shareholders in disclosed corporate misconduct: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1732-1748, April.
    10. Lin Zhang & Yuehua Xu & Honghui Chen, 2022. "Do Returnee Executives Value Corporate Philanthropy? Evidence from China," Journal of Business Ethics, Springer, vol. 179(2), pages 411-430, August.
    11. Bugdol Marek & Puciato Daniel, 2023. "Punishment of employees – its causes, types, and consequences, as well as factors determining punishment for poor quality," International Journal of Contemporary Management, Sciendo, vol. 59(4), pages 1-17, December.

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