IDEAS home Printed from https://ideas.repec.org/a/eee/pacfin/v88y2024ics0927538x24003111.html
   My bibliography  Save this article

The role of financial flexibility in corporate cash donations

Author

Listed:
  • Lu, Chien-Lin
  • Yang, Hsuan-Hua
  • Yeh, Chia-Wei

Abstract

The research on finance has established that firms with greater financial flexibility can navigate the financial crises caused by negative external factors. In this study, we investigate how financial flexibility influences a firm's cash donations. Our findings show that financially flexible firms are not only more likely to make cash donations but also tend to donate more. The positive effect of the firm's financial flexibility on cash donations is weakened when firms have higher R&D expenditures, as they tend to prioritize saving cash over making donations due to the increased uncertainty about the future. Our results further indicate that donations made by financially flexible firms tend to shrink the positive impact of donations on ESG performance. The results show that charity-related expenses may crowd out other expenses within the ESG activities.

Suggested Citation

  • Lu, Chien-Lin & Yang, Hsuan-Hua & Yeh, Chia-Wei, 2024. "The role of financial flexibility in corporate cash donations," Pacific-Basin Finance Journal, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:pacfin:v:88:y:2024:i:c:s0927538x24003111
    DOI: 10.1016/j.pacfin.2024.102559
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927538X24003111
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.pacfin.2024.102559?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Financial flexibility; Corporate donations; Corporate social responsibility;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pacfin:v:88:y:2024:i:c:s0927538x24003111. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/pacfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.