Corporate Philanthropy and Company Value

Although companies regularly give away a large amount of money to charity, there is no clear evidence that such donations improve company revenues, performance, or shareholder wealth. Proponents argue that corporate giving is consistent with shareholder value maximization for a variety of reasons, including improvement of a company’s reputation among customers and enhancement of its standing with regulatory agencies and legislators. Counterarguments suggest that corporate giving often reflects conflicts of interests between shareholders and managers if managers support charities with corporate funds based on personal preferences or to enhance their personal reputation and social networks. This Giving Thoughts article seeks to assess the impact of corporate giving on company value and performance.