Stock market reaction to corporate philanthropic response and silence: does charity style matter?

Abstract

In this study, we multi-dimensionally assess the stock market reaction to the corporate charitable giving for anti-epidemic of COVID-19. Through statistical comparison of giving data from Chinese listed firms, we find that the market reaction is positive and significant only for companies reported in-kind donations. Furthermore, this reaction is larger for firms that donate goods related to their main businesses and do not disclose the value of donations. Meanwhile, the non-contributing companies suffer negative market adjustments when press releases announcing donations of their peers. This new finding of the asymmetric impacts from different types of donations, namely monetary donations and in-kind donations, on firms’ stock performance contributes to the literature, as typical researches using only monetary donations, or the total reported contribution might not adequately evaluate the impact of charitable giving.