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Roses given, fragrance in hand: Charity law and corporate philanthropy—Evidence from a quasi‐natural experiment in China

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  • Shiyu Lu
  • Bo Cheng

Abstract

This study aims to investigate the impact of the 2016 Charity Law of the People's Republic of China on corporate philanthropy and its mechanism. Based on the difference‐in‐difference framework, empirical results show that the charity law has significantly increased the charitable donation level of firms with direct product–consumer contact rather than that in other firms. The additional analysis indicates that corporate self‐interest motives, but not altruistic motives, are ruled out as the mechanisms through which corporate philanthropy is delivered. Furthermore, a closer examination reveals that the charitable donation has not remarkably enhanced firms' operating performance, while the capital market gives these firms a higher valuation.

Suggested Citation

  • Shiyu Lu & Bo Cheng, 2023. "Roses given, fragrance in hand: Charity law and corporate philanthropy—Evidence from a quasi‐natural experiment in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 988-1003, March.
    • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:2:p:988-1003
    DOI: 10.1002/mde.3726
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