Philanthropic disaster relief giving as a response to institutional pressure: Evidence from China

Firms under high institutional pressure are more likely to donate more than firms facing lower institutional pressure, and the findings indicate that state-owned enterprises (SOEs) donate no more than non SOEs, and service companies donate significantly less than non-service companies.

Abstract

This paper investigates if firms under high institutional pressure donate more to disaster relief than firms under lower institutional pressure. By taking Chinese listed companies' donations to May 12, 2008 Wenchuan earthquake as the sample, this research finds that large firms and firms who have political ties donate a significant more to disaster relief than smaller firms and firms who do not have political ties. But the findings indicate that state-owned enterprises (SOEs) donate no more than non SOEs, and service companies donate significantly less than non-service companies. The results of this research partly support the institutional point of view of corporate philanthropy. Firms under high institutional pressure are more likely to donate more than firms facing lower institutional pressure.