Research on CEO Power and Charitable Donation: Evidence from China

Abstract

As an important decision made by the enterprise, charitable donation is influenced by many factors, such as the current strategies as well as the characteristics of CEOs. Taking the data of China’s A-share listed companies from 2008 to 2017, this paper uses factor analysis to measure CEO power and empirically tests the impact of CEO power on corporate philanthropy. Our results show that CEO power is positively related to donations from corporation, in other words CEOs with greater power are more likely to make generous donations. We further discover that CEOs of state-owned enterprises (SEO) as well as those from central and western China are more inclined to make charitable donations. This paper contributes by increasing the understanding on CEO power’s influence over donations in the context of China’s transitional economy. Foundations are laid for the virtuous mechanism of the charitable donation.