@article{e1fd6d1e5f4c46df8de73b0406f81141,
title = "The dark side of individual blockholder philanthropy",
abstract = "We examine the market reaction to charitable pledges by individual blockholders of public firms. As this philanthropy may signal a weakening preference for wealth maximization and may be indicative of distraction or relaxed monitoring, these agency costs may overwhelm any reputation benefits. We find decreased firm value and lower pay-for-performance sensitivity, the effects of which are most severe where monitoring needs are high, the blockholder is a director, or when the firm has ex ante high corporate social responsibility ratings. Our results are robust to controlling for prior charitable foundation involvement, busy director–blockholders, dual-class share structures, blockholder exit, and pre-pledge firm sentiment.",
author = "Shohfi, {Thomas D.} and White, {Roger M.}",
note = "Funding Information: For comments and feedback that greatly improved this manuscript, we thank Uptal Bhattacharya (Editor), an anonymous reviewer, Vic Anand, Nerissa Brown, Jivas Chakravarthy, Diane Denis, Ilia Dichev, Alex Edmans, Xiaohua Fang, Bill Francis, Kimberly Fresenburg, Steve Fuller, Lynn Hannan, Abigail Hornstein, Yvonne Kreis, Patrick Martin, Melanie Millar, Don Moser, Grace Pownall, and Shiva Rajgopal. This manuscript also benefited from input by workshop participants at Emory University, SUNY Albany, Rensselaer Polytechnic Institute, the 4th Annual Academic Conference for Social Responsibility (hosted by the Center for Leadership and Social Responsibility at the University of Washington, Tacoma), the 2014 AAA Management Accounting Section Midyear Meeting, the 2014 Eastern Finance Association Annual Meeting, the 2014 Financial Management Association Annual Meeting, the 2014 Temple University Accounting Conference, and the 2017 Southern Finance Association Annual Meeting. Earlier versions of this manuscript circulated under the title ?Greed is Good: The Agency Costs of Blockholder Philanthropy? and ?Hidden Costs of Blockholder Philanthropy.? We thank the Financial Management Association Award Committee for selecting this paper as a semifinalist for the Best Paper Award at the 2014 FMA Annual Meeting. We also thank Wenyao Hu for excellent research assistance. Publisher Copyright: {\textcopyright} 2019 Financial Management Association International Copyright: Copyright 2020 Elsevier B.V., All rights reserved.",
year = "2020",
month = sep,
day = "1",
doi = "10.1111/fima.12285",
language = "English (US)",
volume = "49",
pages = "741--767",
journal = "Financial Management",
issn = "0046-3892",
publisher = "John Wiley and Sons Inc.",
number = "3",
}