Charitable Donations and Debt Financing of Private Listed Companies in China = Charitable Donations and Debt Financing of Private Listed Companies in China

다국어 초록 (Multilingual Abstract)

As one of the main drivers of China’s national economic development, private enterprises with disadvantages in capital and other resources play a key role in charitable donations. Therefore, the motivations for, and effects of, donations from private enterprises are of great concern. The political relationship between firm executives and the market environment is essential to enterprises’ donations and the formulation of their business strategies. This study empirically examines the impact of corporate philanthropy on their financing constraints, as well as the moderating effects of political connections and degree of marketization. It analyzes data on A-share listed private enterprises on the Shanghai and Shenzhen stock exchanges from 2014 to 2018. It determines that enterprises’ donations are positively correlated with their debt financing, and that larger donations correlate with higher levels of debt financing. Political connections are more significant at the local level, and they moderate the impact of enterprises’ charitable donations on debt financing. In addition, the greater the degree of marketization in an area, the weaker the role of donations was in promoting enterprise debt financing. This study deepens the understanding of the relationship between the Chinese government and Chinese private enterprises, and provides enterprises a theoretical basis for making strategic decisions regarding their donations.