Does share pledging affect corporate philanthropy?: Evidence from China

JC Xiong; YX Tong; FD Zhang; CY Ouyang; KC Chan

doi:10.1111/jbfa.12687

Does share pledging affect corporate philanthropy? Evidence from China

JC Xiong (First Author), YX Tong (Participant Author), FD Zhang (Participant Author), CY Ouyang (Participant Author), KC Chan (Participant Author)

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Abstract

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.

Original language	English
Number of pages	29
Journal	Journal of Business Finance and Accounting
Early online date	13 Feb 2023
DOIs	https://doi.org/10.1111/jbfa.12687
Publication status	Published - 2023

Corresponding author email

caiyueouyang@bjtu.edu.cn

Project sponsor

National Natural Science Foundation of China (NSFC)
Social Science Foundation of Jiangxi Province

Project No.

72102010
21YJ30

Keywords

Corporate philanthropy
Insurance-like protection
Margin call
Share pledging

Indexed by

SSCI
ABDC-A*

Access to Document

10.1111/jbfa.12687

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Cite this

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