Open AccessCorporate Philanthropy and Firm Value in Africa: A case study of Selected Firms in South Africa
Author(s) -
Wycliffe Nduga Ouma
Publication year - 2020
Publication title -
international review of philanthropy and social investment
Language(s) - English
Resource type - Journals
eISSN - 2708-3322
pISSN - 2708-3314
DOI - 10.47019/irpsi.2020/v1n1a4
Subject(s) - leverage (statistics) , corporate social responsibility , enterprise value , revenue , panel data , business , accounting , value (mathematics) , sample (material) , ordinary least squares , corporate governance , finance , economics , public relations , political science , chemistry , chromatography , machine learning , computer science , econometrics
This study sought to investigate the relationship between corporate philanthropy and firm value in Africa, using firms listed on theJohannesburg Securities Exchange as the representative sample. The analysis discovered that only 25 firms had complete data over ashort period of 11 years resulting in a panel of 255 firm-year observations. The study established that Corporate Donations in SouthAfrica is moderately nascent but has been growing steadily over the last few years. With only 13 firms involved in corporate donationsby the year 2008, the number is found to be ten times by the end of 2018. Using the panel ordinary least squares model, results revealedthat four variables, including the corporate social responsibility index, positively influenced firm value. The study also investigatedthe motives for corporate philanthropy. Results indicated that the book value of a firm, sales revenue size (total assets), leverage, andcorporate social responsibility reporting significantly influenced a firm’s decision to donate to charity. The findings indicate that a firm’sparticipation in charity is a long-term strategic commitment for financial returns to all corporate stakeholders.