Does corporate philanthropy provide insurance value? Evidence from the securities law revision in China

IF 4.8 2区经济学 Q1 BUSINESS, FINANCE

Pacific-Basin Finance Journal Pub Date : 2025-03-07 DOI:10.1016/j.pacfin.2025.102732

Yijun Liu , Trung Nguyen , Rong Xu , Donald Lien

引用次数: 0

Abstract

This study investigates the ex-ante insurance value of corporate philanthropy on firm valuation by exploiting an exogenous increase in firms' future litigation risk due to the adoption of class-action lawsuits in the 2019 Securities Law revision. Analyzing a sample of Chinese listed firms constructed from the propensity score matching approach, we find that the commitment to corporate philanthropy exerts ex-ante insurance-like effects. In addition, firms with a history of being a defendant in a lawsuit or greater litigation-related expenses realize more benefits from CP investments. The empirical findings are robust to additional sensitivity checks and offer important implications regarding the use of corporate donations as a risk management tool.

查看原文本刊更多论文

求助全文

约1分钟内获得全文求助全文

来源期刊

Pacific-Basin Finance Journal BUSINESS, FINANCE-

CiteScore

6.80

自引率

6.50%

发文量

157

期刊介绍： The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.