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Corporate giving in Taiwan: agency cost theory vs. value enhancement theory

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  • Chien-Pang Lin
  • Ming-Hsiang Chen
  • Jie Wang
  • Li Tian

Abstract

This article examines the determinants of corporate giving (CG) in Taiwan according to agency cost (AC) and value enhancement (VE) theories. Panel regression test results reveal several new and interesting pieces of evidence. First, VE determinants outweigh AC determinants in explaining CG there. Second, the positive link between the current CG ratio (CGR) and the lagged CGR (CGR(-1)) suggests the consistent nature of CG. Third, after the global financial crisis in 2008, the influence of debt leverage on CGR vanished, but the impact of managerial insiders’ shareholdings on CGR became significant. Last, the influences of VE determinants and CGR(-1) on CGR remain during both pre-crisis and post-crisis periods. Moreover, after the crisis, CG was still motivated to create current value for shareholders, and was apparently used as a business strategy to signal companies’ financial or managerial stability.

Suggested Citation

  • Chien-Pang Lin & Ming-Hsiang Chen & Jie Wang & Li Tian, 2017. "Corporate giving in Taiwan: agency cost theory vs. value enhancement theory," Asia Pacific Business Review, Taylor & Francis Journals, vol. 23(1), pages 135-151, January.
    • Handle: RePEc:taf:apbizr:v:23:y:2017:i:1:p:135-151
    DOI: 10.1080/13602381.2016.1149376
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    Cited by:

    1. Camelia-Daniela Hategan & Ruxandra-Ioana Curea-Pitorac, 2017. "Testing the Correlations between Corporate Giving, Performance and Company Value," Sustainability, MDPI, vol. 9(7), pages 1-20, July.

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