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http://hdl.handle.net/10419/25545
  
Title:Do markets love misery? Stock prices and corporate philanthropic disaster response PDF Logo
Authors:Muller, Alan
Kräussl, Roman
Issue Date:2007
Series/Report no.:CFS Working Paper 2008/10
Abstract:While companies have emerged as very proactive donors in the wake of recent major disasters like Hurricane Katrina, it remains unclear whether that corporate generosity generates benefits to firms themselves. The literature on strategic philanthropy suggests that such philanthropic behavior may be valuable because it can generate direct and indirect benefits to the firm, yet it is not known whether investors interpret donations in this way. We develop hypotheses linking the strategic character of donations to positive abnormal returns. Using event study methodology, we investigate stock market reactions to corporate donation announcements by 108 US firms made in response to Hurricane Katrina. We then use regression analysis to examine if our hypothesized predictors are associated with positive abnormal returns. Our results show that overall, corporate donations were linked to neither positive nor negative abnormal returns. We do, however, see that a number of factors moderate the relationship between donation announcements and abnormal stock returns. Implications for theory and practice are discussed.
Subjects:Corporate Philanthropy
Disasters
Event Study
Market Value
Hurricane Katrina
JEL:G14
M21
Persistent Identifier of the first edition:urn:nbn:de:hebis:30-54383
Document Type:Working Paper
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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