The increasing demands placed on businesses to fulfill its social responsibilities have heightened interests in corporate donations. Corporate donations exist when a corporation donates a portion of its resources to a societal cause. In addition, corporations have developed a wide array of charitable vehicles, namely, foundations, non-profit and association umbrella groups, as well as community outreach programs. Studies on this particular topic have been carried out in other markets such as the United States and the United Kingdom as well as in Europe. Being the first research in Malaysia, the goals of this study were (1) to examine whether stakeholders especially investors consider corporate donations when they determine the value of the firm, (2) to test empirically the determinants (i.e., leverage, firm's size, and profitability) of corporate donations made by 774 Malaysian Public Listed Companies of the Main Board. Three of the firms' specific characteristics were derived from agency and stakeholder theories. Firstly, multiple regression analysis was conducted in order to examine the perception of the stakeholders, especially investors, on the corporate donations. Secondly, a logistic regression analysis was conducted in order to examine the determinants of corporate donations made by the Public Listed Companies in Malaysian market. The results revealed that there is a positive relationship between corporate donations and the market value of equity. This study also revealed that there is no significant relationship between the leverage and the corporate donations. This result contradicts the findings of some other researches. However, the study provides evidence that the company size and profitability are important determinants of companies that are more likely to contribute to the society.
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Business, Management and Accounting(all)