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Looking Good in the Eyes of Stakeholders: Corporate Giving and Corporate Acquisitions

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  • Yongqiang Gao

    (Huazhong University of Science and Technology)

  • Miaohan Zhang

    (Huazhong University of Science and Technology)

  • Haibin Yang

    (Chinese University of Hong Kong)

Abstract

In this study we examine how a firm’s corporate philanthropic behavior may affect its subsequent acquisitions. Drawing upon stakeholder theory, we argue that firms may strategically use philanthropic donations to obtain support or approval from stakeholders so as to advance subsequent acquisitions, suggesting a positive relationship between corporate giving and corporate acquisitions in terms of both acquisition number and value. We further contend that stakeholders’ support for acquisitions would be even more critical for firms with negative or conservative attitudes to external stakeholders. Therefore, it is expected that both negative media coverage and controversial industry sectors will strengthen the positive relationship between corporate giving and subsequent corporate acquisitions. Analyses of publicly listed manufacturing firms in China during 2004–2015 largely support our predictions. This study deepens our understanding about the drivers of corporate giving and highlights its role in corporate acquisitions.

Suggested Citation

  • Yongqiang Gao & Miaohan Zhang & Haibin Yang, 2023. "Looking Good in the Eyes of Stakeholders: Corporate Giving and Corporate Acquisitions," Journal of Business Ethics, Springer, vol. 185(2), pages 375-396, June.
    • Handle: RePEc:kap:jbuset:v:185:y:2023:i:2:d:10.1007_s10551-022-05178-y
    DOI: 10.1007/s10551-022-05178-y
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