What Determines the donation expenditures of public institutions?

Public institutions in Korea make a considerable amount of expenditure on corporate donations. This paper examines what determines corporate donations of public institutions using the firm-level panel data on 150 public institutions in Korea, from 2019 to 2023. The estimation results show that the donation expenditures increase as the debt ratio is lower, and the effective corporate tax rate of previous period is higher. However, ROA is not related with donation expenditure. The results also find out that public institutions’ donations are affected by the government evaluation. Donation expenditures increase when the CEO of the public institution is paid higher bonus, and when the it purchases more environment-friendly products. In 2022, the government evaluation for public institutions assigned less points on corporate social activity. Year dummies are included to investigate the effect of an evaluation change, and the results show that donation expenditures remarkably decreases as less points are assigned.