Corporate philanthropy : insights from the 2008 Wenchuan earthquake in China

We explore the equity market impact of board announcements of corporate donations made in response to the May 12th 2008 Wenchuan earthquake in China. Our event study uses a sample of board announcements of corporate donations from Chinese A-share listed companies. We find that donor companies providing products and/or services directly to end-consumers tend to enjoy higher abnormal stock returns, thereby documenting a link between corporate social responsibility and corporate financial performance at least for some corporate citizens. In light of the empirical results, the study suggests that corporate philanthropic involvement should be treated as a differentiated type of marketing tool to obtain social reputation and publicity, as well as a relationship cultivation mechanism with local government authorities.