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The CEO's Representation of Demands and the Corporation'sResponse to External Pressures: Do Politically Affiliated Firms DonateMore?

Published online by Cambridge University Press:  02 February 2015

Ming Jia  and
Zhe Zhang
Ming Jia
Affiliation:
Northwestern Polytechnical University, China
Zhe Zhang
Affiliation:
Xi'an Jiaotong University, China
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Abstract

This study seeks to explain why firms respond in different ways to similarexternal administrative pressures, such as government demands for charitablegiving, particularly in a transitional economy such as China's. Taking theperspective of the CEO's representation on external demands, the studyexplores the relationship between political affiliation and corporategiving, stimulated by powerful and politically affiliated CEOs, who are thegovernment's natural constituency and who comply with governmental demandsfor donation. The study introduces contingent factors that influence theCEO's perception of how to satisfy government demands, and that moderate therelationship between political affiliation and corporate giving. Usingfirm-level data of corporate contributions following the Sichuan earthquakeof May 12, 2008, we find that corporations with CEOs who hold politicalaffiliations have a significantly higher probability of donation and alsomore cash giving. This relationship is moderated by contingent factors suchas government ownership, financial condition, and concentration of votingrights.

Keywords

corporate givingearthquakespolitical affiliationrepresentation of external demands慈善捐款地震政治关联外部诉求代表
Type
Articles
Information
Management and Organization Review , Volume 9 , Issue 1 , March 2013 , pp. 87 - 114
Copyright
Copyright © International Association for Chinese Management Research 2013

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