TY - JOUR
T1 - Social capital during the coronavirus pandemic
T2 - the value of corporate benevolence
AU - Filbeck, Greg
AU - Robbins, Eric
AU - Zhao, Xin
N1 - Publisher Copyright:
© 2021 Informa UK Limited, trading as Taylor & Francis Group.
PY - 2022
Y1 - 2022
N2 - In this paper, we explore market reaction to announcements of corporate donations associated with the COVID-19 crisis. Companies with larger firm size, higher leverage, higher institutional ownership, and higher ESG rankings are more likely to donate COVID relief. We observe statistically significant positive abnormal returns over the event window, driven by a subsample of community relief funds. Our results support the notion of a strategic, reputational premium for participating firms. Consistent with signalling theory, we find firms without ESG scores show positive share price responses to corporate benevolence announcements. This finding suggests the market is less likely to anticipate corporate acts of benevolence from firms with missing ESG scores. Our findings suggest that the market positively reacts to corporate philanthropy news during a crisis. The strongest stock market reaction is related to those firms with missing or less favourable ESG scores.
AB - In this paper, we explore market reaction to announcements of corporate donations associated with the COVID-19 crisis. Companies with larger firm size, higher leverage, higher institutional ownership, and higher ESG rankings are more likely to donate COVID relief. We observe statistically significant positive abnormal returns over the event window, driven by a subsample of community relief funds. Our results support the notion of a strategic, reputational premium for participating firms. Consistent with signalling theory, we find firms without ESG scores show positive share price responses to corporate benevolence announcements. This finding suggests the market is less likely to anticipate corporate acts of benevolence from firms with missing ESG scores. Our findings suggest that the market positively reacts to corporate philanthropy news during a crisis. The strongest stock market reaction is related to those firms with missing or less favourable ESG scores.
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U2 - 10.1080/00036846.2021.1977773
DO - 10.1080/00036846.2021.1977773
M3 - Article
AN - SCOPUS:85115187094
SN - 0003-6846
VL - 54
SP - 1460
EP - 1472
JO - Applied Economics
JF - Applied Economics
IS - 13
ER -