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Political Connection, Ownership Structure, and Corporate Philanthropy in China: A Strategic-Political Perspective

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Abstract

This paper investigates whether philanthropic giving decisions and amount of charitable giving are related to firms’ political connections and ownership type. To this end, Chinese firms listed on either the Shenzhen or Shanghai stock exchange between 2004 and 2011 are examined, where government interference in the business sector is prevalent, state ownership structure is dominant, and corporate political connections prevail. Our analyses show (1) a significant and positive relationship between political connections and the likelihood and extent of firm contributions; (2) a significant and negative relationship between state ownership and extent of firm contributions; and (3) a stronger relationship between political connections and corporate philanthropy in non-state-owned firms. These findings with regard to the relationship between corporate giving, political connections, and ownership type have important implications for understanding corporate giving behavior in China and in emerging markets in general.

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Notes

  1. Data are available on the website: http://www.charity.gov.cn.

  2. Data for China are from the website: http://www.charity.gov.cn; data for the United States are from the website: http://www.charitynavigator.org; and data for Australia are from the website: http://www.dss.gov.au.

  3. The document is available on the SASAC website: http://www.sasac.gov.cn.

  4. The document is available on the website of the SASAC of Tianjin Municipal People’s Government: http://www.tjsa.gov.cn/.

  5. China Securities Regulatory Commission: http://www.csrc.gov.cn.

  6. The official listed firm information-disclosure website appointed by CSRC is cninfo.com.cn.

  7. In the 2008 tax reform, the corporate tax rate was reduced from 33 to 25 % and the limit of charitable deductions was lifted from 3 to 12 % of a firm’s taxable income.

  8. The results are not presented, but are available upon request.

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Acknowledgments

We gratefully acknowledge that this study is sponsored by the National Natural Science Foundation of China (Approval Numbers: 71372166 and 71272214), and the Foundation of Jinan University (Approval Number: 12JNKY003). We would also like to express our sincere appreciation to the editor, Professor Thomas Clarke, and anonymous reviewers for their constructive comments.

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Authors and Affiliations

  1. School of Management, Jinan University, Guangzhou, China

    Sihai Li & Xianzhong Song

  2. School of Business, University of Western Sydney, Penrith South DC, NSW, Australia

    Huiying Wu

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  1. Sihai Li
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Correspondence to Huiying Wu.

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Li, S., Song, X. & Wu, H. Political Connection, Ownership Structure, and Corporate Philanthropy in China: A Strategic-Political Perspective. J Bus Ethics 129, 399–411 (2015). https://doi.org/10.1007/s10551-014-2167-y

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