Affiliation:
1. School of Accounting Capital University of Economics and Business Beijing China
2. School of Business Administration South China University of Technology Guangzhou China
Abstract
AbstractThis study examines whether corporate philanthropy improves firms' competitiveness in the market for private investments in public equity (PIPEs). Adopting a Chinese PIPE sample between 2007 and 2019, corporate donations have been observed to increase the likelihood of issuers' PIPE applications being approved by the Chinese Securities Regulatory Commission (CSRC). It is also shown that CSRC spends less time reviewing PIPE applications of donating firms. Consistent with the signalling argument, we find that firms with corporate donations may be unlikely to act opportunistically in PIPE issuing. Further, the effect of corporate donations is stronger in competitive industries and large‐scale PIPEs. Finally, short‐run post‐issuance abnormal returns tend to be higher for PIPE issuers with corporate philanthropy. Overall, our findings indicate that corporate philanthropy can serve as a differentiation strategy to compete for PIPEs.
Funder
National Natural Science Foundation of China
Humanities and Social Science Fund of Ministry of Education of China
Guangdong Office of Philosophy and Social Science
Basic and Applied Basic Research Foundation of Guangdong Province
Fundamental Research Funds for the Central Universities
Natural Science Foundation of Guangzhou Municipality
National Social Science Fund of China