The effect of government official's visit on corporate charitable donation: Evidence from China

This paper aims to investigate whether corporate charitable donation likelihood and amount are related to government official's visit, which play a major role in government interference to business sectors in emerging markets. The results show that government official's visit is significantly and positively correlated to the likelihood and amount of corporate charitable donation, which still holds after controlling for endogeneity and robustness tests. Further analysis indicates that government official's visit can promote corporate charitable donation by increasing organizational legitimacy, public attention and policy resources. Heterogeneity analysis suggests that this effect is stronger for non-state-owned enterprises and the positive impact of government official's visit on corporate charitable donation is primarily attributable to municipal official's visit and guiding visit. Additionally, the relative increase in corporate charitable donation is associated with positive CSR rating and market capital effects. These findings on the relationship between government official's visit and corporate charitable donation have important implications for understanding corporate social responsibility behavior in China and in other emerging economies.