Do corporate donations affect the cost of equity? International evidence
基于44个国家2002-2019年数据，研究发现企业捐赠通过降低风险和提升声誉，使股权资本成本下降12.9至14.9个基点，对政策制定者和投资者有参考价值。
Purpose This research investigates the impact of corporate donations on the cost of equity capital. We argue that corporate donations reduce firm risk and improve reputation, affecting the cost of equity. Design/methodology/approach We employ a large international sample of 44 countries from 2002 to 2019. We use several econometric methods and conduct a range of sensitivity tests to examine the robustness of findings. Findings We find that corporate donations reduce the cost of equity capital. In terms of economic significance, the study shows that one standard deviation increase in corporate donations leads to a 12.9 to 14.9 basis point decrease in the cost of equity capital. The additional analyses reveal that donation patterns, country-specific attributes and macroeconomic characteristics likely influence the findings. Our results are robust to a batch of sensitivity tests, including GMM regression analysis and tests with alternative measures for corporate donations and the cost of equity capital. Practical implications Our research findings have practical implications. Policymakers can encourage firms to undertake philanthropic activities to reduce business risk, which benefits both firms and investors. Originality/value We contribute to the theoretical discussion about the role of corporate philanthropy. We argue that firm risk is reduced due to philanthropic activities such as corporate donations. Overall, our results suggest that corporate donations affect worldwide external financing costs.