Charitable Contributions as Corporate Bribery in China

The Abstract of a paper recently posted to SSRN entitled “Donate to Bribe?  Effects of China’s Anti-Corruption Campaign on Charity Donations”

Abstract

Using data on publicly-listed companies in China from 2008 to 2016, we find that the 2013 Chinese anti-corruption campaign remarkably reduced charitable donations from companies with strong political connections. The donation reductions were accompanied with a significant cutback in government subsidies, a decline in the financial performance of the connected companies, and reduced acquisition of political connections for all companies. The findings suggest that the centrally led anti-corruption campaign in China was effective in combating corrupt collusion between firms and government officials and imply that charitable donations may be an important instrument that firms use to extract political favors.

Darryll K. Jones