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How Does the Market React to Corporate Philanthropic Behavior? —evidence from the COVID-19 Pandemic Shock

ABSTRACT Based on 1,130 listed Chinese firms’ charitable donation data during the COVID-19, this paper used the Event Study to examine market reactions to the epidemic and utilized OLS and Heckman two-stage models to investigate the impact of charitable donations on corporate market performance. Results show that greater corporate charitable material and medical donations result in more favorable short-term market reaction but weaker in the long term. Moreover, the low-leveraged, non-pharmaceutical, and non-SOEs can obtain better short-term performance through philanthropic donations. Findings suggest that the negative market sentiment from the COVID-19 cannot be offset by the short-term positive effects of corporate donations.