The dark side of individual blockholder philanthropy

Thomas D. Shohfi, Roger M. White

Research output: Contribution to journalArticlepeer-review


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.

Original languageEnglish (US)
Pages (from-to)741-767
Number of pages27
JournalFinancial Management
Issue number3
StatePublished - Sep 1 2020

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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