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Corporate philanthropy and tunneling: Evidence from China

Chen, J., Dong, W., Tong, J. and Zhang, F. (2016) Corporate philanthropy and tunneling: Evidence from China. Journal of Business Ethics . First Online.

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This paper examines the association between corporate philanthropy and tunneling by controlling shareholders. Using a unique dataset from China, the paper finds evidence that firms donating more are less likely to tunnel. The negative association between philanthropy and tunneling is stronger when firms are faced with more severe agency conflicts, as indicated by lower largest shareholding, fewer growth opportunities, lower state ownership, and weaker product market competition. The results suggest that companies engaging in philanthropy have incentives to enhance their reputations and improve their relationships with stakeholders.

Publication Type: Journal Article
Murdoch Affiliation: School of Management and Governance
Publisher: Kluwer Academic Publishers
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