We investigate the effect of insiders' share pledging (SP) on corporate philanthropy and find that SP firms engage in corporate philanthropy more often than non-SP firms. This effect is more pronounced for firms with higher downward price pressure or margin call risks. Our results remain robust after using alternative measures and addressing endogeneity issues. We also sample a group of SP and non-SP firms that make comparable philanthropic donations and find that SP firms show better market performance and lower downside risks of stock price movements than non-SP firms, indicating that SP firms use corporate philanthropy to alleviate margin call risks.
Corresponding author email@example.com
Project sponsorNational Natural Science Foundation of China (NSFC)
Social Science Foundation of Jiangxi Province
- Corporate philanthropy
- Insurance-like protection
- Margin call
- Share pledging