Donating money to get money: The role of corporate philanthropy in stakeholder reactions to IPOs

摘要

The relationship between corporate philanthropy and corporate financial performance (CFP) is quite complex. The extant literature on corporate philanthropy and corporate financial performance are inconsistent. The present research work has tried to examine how a unique set of variables about corporate philanthropy influences stakeholders of young entrepreneurial corporations in the initial public offering (IPO) market. During IPOs, different stakeholders such as prestigious underwriters, venture capitalists and institutional investors respond to the same information about corporate philanthropy. The study based on a sample of IPO issuers on Chinese exchanges for the two years after September 2009, when the stock exchanges for young, entrepreneurial corporations opened. The framework has been tested on three arguments. It has been proposed that 1.In the IPO-preparation stage, IPO firms engaging in corporate philanthropy attract less prestigious underwriters, acquire less VC investment, and have lower IPO costs, 2.When companies go public, there is a U-shaped relationship between the issuer's degree of philanthropy and institutional investor sentiment, based on the issue's market valuation premium, and 3.Information about corporate philanthropy affects the issuance and trading premiums for IPOs that receive negative media coverage. The results and the implications have been discussed. (85 refs.)