Value-Enhancing Social Responsibility: Market Reaction to Donations by Family vs. Non-family Firms with Religious CEOs

Using a signaling framework, we argue that ethical behavior as evidenced by charitable donations is viewed more positively by investors when seen not to be based on self-serving motives but rather on authentic generosity that builds moral capital. The affirmed religiosity of CEOs may make their ethi...

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Bibliographic Details
Published in:Journal of business ethics 2020-05, Vol.163 (4), p.745-758
Main Authors: Maung, Min, Miller, Danny, Tang, Zhenyang, Xu, Xiaowei
Format: Article
Language:English
Subjects:
Authenticity
Business and Management
Business Ethics
Capital
Charities
Chief executives
Companies
Donations
Education
Embeddedness
Ethical conduct
Ethics
Executives (Business)
Family owned businesses
Investors
Management
Markets
Original Paper
Owners
Philanthropy
Philosophy
Quality of Life Research
Religion
Religiosity
Securities markets
Social responsibility
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Summary:Using a signaling framework, we argue that ethical behavior as evidenced by charitable donations is viewed more positively by investors when seen not to be based on self-serving motives but rather on authentic generosity that builds moral capital. The affirmed religiosity of CEOs may make their ethical position more credible, while their embeddedness within a family business suggests that CEOs are backed by powerful owners with long-time horizons and a desire to build moral capital with stakeholders. We find in a study of market responses to 1572 corporate donations by S&P 1500 firms that financial markets react more positively to charitable initiatives from firms with religion-declared CEOs, but only if these are family businesses.
ISSN:0167-4544
1573-0697
DOI:10.1007/s10551-019-04381-8