How charitable giving affects litigation duration? Empirical evidence from China

Area of Science:

• Corporate Social Responsibility
• Organizational Reputation Theory
• Legal Studies

Background:

• Corporate social responsibility (CSR) is often manifested through charitable donations.
• Existing research primarily examines the economic impacts of corporate donations, neglecting their legal implications.
• The influence of corporate charitable giving on litigation outcomes remains under-explored.

Purpose of the Study:

• To investigate the impact of corporate charitable donations on the litigation duration of listed companies.
• To identify the underlying mechanisms through which charitable donations affect litigation.
• To explore regional and marketization-specific effects on this relationship.

Main Methods:

• Analysis of litigation and arbitration data from A-share listed companies in Shanghai and Shenzhen (2008-2021).
• Utilized panel data to construct relationships between corporate donations, litigation status, and duration.
• Employed robustness tests and endogeneity issue resolution to validate findings.

Main Results:

• Charitable donation behavior significantly shortens corporate litigation duration.
• The effect is pronounced when listed companies act as plaintiffs, but not as defendants.
• Reputation mechanisms mediate the negative relationship between donations and litigation duration.
• The effect is stronger in Northeast China and less marketized regions for civil and arbitration cases.
• Corporate donations serve as both reputation compensation and insurance.

Conclusions:

• Corporate charitable donations positively influence litigation outcomes by reducing duration, primarily through reputation enhancement.
• The findings clarify the interaction between corporations and judicial departments, enriching organizational reputation theory.
• Understanding the motivation behind corporate charitable donations is deepened by this legal perspective.