Is Doing Good Good for You? Yes, Charitable Contributions Enhance Revenue Growth

A key question concerning socially responsible corporate activities is whether such actions achieve traditional goals, such as profit maximization and shareholder value creation, or whether such activities represent a drain on resources by opportunistic managers. Much of the debate about the legitimacy of and justification for socially responsible activities would be settled if it is convincingly shown that they further traditional business goals. In this study we provide such evidence. Using a large sample of charitable contributions made by public companies from 1989 through 2000, and a statistical methodology that distinguishes causation from association, we document that charitable contributions enhance the future revenue growth of the donors. In particular, we find evidence that, for firms in industries that are highly sensitive to consumer perception, corporate giving is associated with subsequent sales growth. On the other hand, our results do not provide strong evidence that revenue growth drives future charitable giving

Is Doing Good Good for You? Yes, Charitable Contributions Enhance Revenue Growth

A key question concerning socially responsible corporate activities is whether such actions achieve traditional goals, such as profit maximization and shareholder value creation, or whether such activities represent a drain on resources by opportunistic managers. Much of the debate about the legitimacy of and justification for socially responsible activities would be settled if it is convincingly shown that they further traditional business goals. In this study we provide such evidence. Using a large sample of charitable contributions made by public companies from 1989 through 2000, and a statistical methodology that distinguishes causation from association, we document that charitable contributions enhance the future revenue growth of the donors. In particular, we find evidence that, for firms in industries that are highly sensitive to consumer perception, corporate giving is associated with subsequent sales growth. On the other hand, our results do not provide strong evidence that revenue growth drives future charitable giving

Is Doing Good Good for You? Yes, Charitable Contributions Enhance Revenue Growth

A key question concerning socially responsible corporate activities is whether such actions achieve traditional goals, such as profit maximization and shareholder value creation, or whether such activities represent a drain on resources by opportunistic managers. Much of the debate about the legitimacy of and justification for socially responsible activities would be settled if it is convincingly shown that they further traditional business goals. In this study we provide such evidence. Using a large sample of charitable contributions made by public companies from 1989 through 2000, and a statistical methodology that distinguishes causation from association, we document that charitable contributions enhance the future revenue growth of the donors. In particular, we find evidence that, for firms in industries that are highly sensitive to consumer perception, corporate giving is associated with subsequent sales growth. On the other hand, our results do not provide strong evidence that revenue growth drives future charitable giving

Is Doing Good Good for You? Yes, Charitable Contributions Enhance Revenue Growth

A key question concerning socially responsible corporate activities is whether such actions achieve traditional goals, such as profit maximization and shareholder value creation, or whether such activities represent a drain on resources by opportunistic managers. Much of the debate about the legitimacy of and justification for socially responsible activities would be settled if it is convincingly shown that they further traditional business goals. In this study we provide such evidence. Using a large sample of charitable contributions made by public companies from 1989 through 2000, and a statistical methodology that distinguishes causation from association, we document that charitable contributions enhance the future revenue growth of the donors. In particular, we find evidence that, for firms in industries that are highly sensitive to consumer perception, corporate giving is associated with subsequent sales growth. On the other hand, our results do not provide strong evidence that revenue growth drives future charitable giving

Investor Sentiment, Post-Earnings Announcement Drift, and Accruals

We examine whether stock price reactions to earnings surprises and accruals vary systematically with investor sentiment. Using quarterly drift tests and monthly trading strategy tests, we find that holding good news firms (and low accrual firms) following pessimistic sentiment periods earns higher abnormal returns than holding good news firms (and low accrual firms) following optimistic sentiment periods. We also document that abnormal returns in the short-window around earnings announcements for good news firms are higher during periods of low sentiment. Overall, our results indicate that investor sentiment influences the source of excess returns from accounting-based trading strategies

Spreading the News: Donor Response to Disclosures About Nonprofit Fraud

Even the most conscientious nonprofit organizations can fall victim to fraud. We examine how a nonprofit organization’s Form 990 disclosures and media coverage about an asset diversion influence subsequent donor support. Consistent with a loss in trust, we observe a decrease in donations following a diversion. This decrease is amplified when the diversion is reported in the news. We also find that donations decline more when organizations do not provide transparent disclosures and when losses are higher but only if the diversion receives media coverage. Finally, our results indicate that donors punish organizations less when they report higher recoveries and governance improvements. This study describes mechanisms though which news coverage enhances donor oversight. The media can: (a) directly inform some donors, (b) prompt some donors to obtain further information, and (c) motivate organizations to provide higher-quality disclosure