Do Markets Love Misery? Stock Prices and Corporate Philanthropic Disaster Response.

Muller, Alan; Kräussl, Roman

doi:10.5465/ambpp.2008.33640714

Cited by 7 publications

(6 citation statements)

References 56 publications

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“…Prior research has identified factors that lead firms to engage in more philanthropy to natural disasters, including firm size (Zhang, Rezaee, & Zhu, 2009), firm profitability (Crampton & Patten, 2008), as well as firms seeking to atone for poor reputations (Jia & Zhang, 2015; Madsen & Rodgers, 2015; Muller & Kraussl, 2008) or public attention (Jia & Zhang, 2015). Studies in this area have also explored how institutional pressures from state actors and social norms influence philanthropic responses in different geographies (Gao, 2011; Zhang et al, 2009).…”

Section: Literature Reviewmentioning

confidence: 99%

Patterns of Firm Responses to Different Types of Natural Disasters

McKnight

Linnenluecke

2017

Business & Society

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This article examines the relationships between disaster type and firms’ disaster responses. We draw on a unique dataset of 2,164 press releases related to the occurrence of 206 natural disasters (hurricanes, flooding, tornadoes, and wildfires) over a 10-year period (2005-2014) to analyze how firm responses are shaped by the type of disaster it faces. Firms play an increasingly important role in disaster response. We find that firms engage in more anticipatory responses when the type of disaster a firm faces exhibits even impact dispersion and high expected recurrence, and provides substantial warning. Our study draws a relationship between physical geography, disaster type, and more anticipatory firm responses which can improve how firms and communities respond to the risks posed by different types of natural disasters. The article concludes by outlining an agenda for future research on firm responses to natural disasters.

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Section: Literature Reviewmentioning

confidence: 99%

Patterns of Firm Responses to Different Types of Natural Disasters

McKnight

Linnenluecke

2017

Business & Society

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Section: Introductionmentioning

confidence: 97%

“…While there has been a long history of corporate donations, corporate donations to natural disasters are relatively new, with a noticeable rise since the 2004 South Asian Tsunami (Muller and Kraussl, 2008). To our knowledge, Muller and Kraussl (2008) is the only study showing the wealth effect of corporate donations in relation to disaster relief. They conduct a market event study by examining the stock market reaction to announcements of corporate donations by 108 firms to the Hurricane Katrina that swept the USA in 2005.…”

Section: Introductionmentioning

confidence: 97%

Ownership identity and corporate donations: evidence from a natural experiment in China

Hoi

Jun

Zou³

2019

CFRI

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Purpose Taking advantage of the 2008 Sichuan Great Earthquake as a natural experiment, the purpose of this paper is to examine the motives and effects of corporate donations by focusing on how firm ownership identity as the first-order governance mechanism affects the motives and effects of disaster relief donations. Design/methodology/approach The authors conduct regressions and market event studies, and use matching to address the confounding effects of differences in firm characteristics. Findings The authors hypothesize that private firms that are better governed than state-owned enterprises (SOEs) are more likely to donate for value maximization. Consistent with this, the authors find that private firms are more likely to donate to the 2008 Sichuan earthquake and donate more than SOEs. The effects of secondary governance variables in the donation determinant models (e.g. board independence and managerial ownership) are more consistent with the value maximization argument. While short-term market reaction to donation announcement is not significant for private firms, it is lower when SOEs make a large donation. Consistent with the hypothesis, the authors find that over the 24–36 months following the donation, private donors realize a higher abnormal stock return. Research limitations/implications The study contributes to the debate over the merits/costs of corporate donations and helps better understand how SOEs and private firms (particularly family-owned firms) differ in their governance and financial decision-making. Practical implications Both managers from private firms and SOEs can use the findings of this study to better guide their donation and other philanthropic decisions. Originality/value This study is the first to examine both the motives and effects of corporate donations by both private and SOEs taking advantage of the 2008 Sichuan, thereby significantly extending prior related studies.

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“…Often, natural disasters cause not only huge economic losses, but also strongly affect social and environmental structures (Deryugina, 2017;Martin & Moser, 2016;Muller & Kräussl, 2008).…”

Section: Introductionmentioning

confidence: 99%

“…Often, natural disasters cause not only huge economic losses, but also strongly affect social and environmental structures (Deryugina, 2017; Martin & Moser, 2016; Muller & Kräussl, 2008). For example, cyclones and hurricanes often cause substantial beach erosions, massive tree loss, and water contamination (Chapman et al, 2008; Tidwell, 2006).…”

Section: Introductionmentioning

confidence: 99%

The influence of corporate philanthropic donations on private investors' valuation judgments: Experimental evidence

Theis,

Nipper,

Meier

2023

Corp Soc Responsibility Env

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Corporate donations towards disaster relief efforts, often called corporate philanthropic disaster relief (CPDR), are commonplace practice and one critically observed subcategory of CSR, with high visibility in the global media. We investigate whether private investors value firms differently based on their perception of firm's engagement in CPDR. Therefore, we created an experimental investment scenario in which we manipulate the magnitude of a hypothetical Firm Y's CPDR efforts to evaluate investment decisions of private investors recruited from Amazon's Cloud Research platform. Our findings suggest that higher CPDR generally affects private investors' assessment of a firm's value positively. Using a structural equation model and the CSR skepticism concept to examine private investors motive attribution to firms' CPDR, we find that private investors perceive high CPDR as an indicator for honest and values‐driven corporate social behavior and a low CPDR as an ingratiating attempt to win favor. Thus, we extend prior research by unveiling through which channels of impact CPDR potentially affects firm value and find an explanation why CPDR can have adverse effects on firm value.

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Do Markets Love Misery? Stock Prices and Corporate Philanthropic Disaster Response.

Cited by 7 publications

References 56 publications

Patterns of Firm Responses to Different Types of Natural Disasters

Patterns of Firm Responses to Different Types of Natural Disasters

Ownership identity and corporate donations: evidence from a natural experiment in China

The influence of corporate philanthropic donations on private investors' valuation judgments: Experimental evidence

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