| Paper Number | KCB-WP-2016-002 |
|---|---|
| Title | Business Groups and Tunneling: Evidence from Corporate Charitable Contributions by Korean Companies |
| Title(Other) | |
| Author | Byungki Kim ; Jinhan Pae ; Choong-Yuel Yoo |
| Publisher | |
| Abstract | This paper investigates whether corporate philanthropic decisions are associated with a firm’s listing status and business group affiliation. Analyzing a large sample of public and private firms in Korea, we find that (1) public firms make more charitable contributions than private firms; (2) business group-affiliated firms make more charitable contributions than non-affiliated firms; and (3) the greater corporate giving by public firms vis-a-vis private firms is more pronounced for business group-affiliated firms than for non-affiliated firms. The results suggest that public firms owing to greater public scrutiny and business groups owing to higher political costs are promoted to make more corporate charitable contributions. Further, the results are consistent with business groups’ strategic coordination of their affiliates’ philanthropic decision to maximize the value of the business group as a whole or to tunnel business group resources out to controlling shareholders who hold a larger portion of private affiliates than public affiliates. |
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