Corporate Philanthropy (CP) has become increasingly
important as a means of filling gaps in the provision of social services using
Public-Private partnerships. Very little research exists on determinants and
motives of CP in Pakistan. This paper utilizes data from the 2001-2011 Annual
Reports of 234 firms listed on the
Karachi Stock Exchange (KSE) to analyze the association of CP with different
firm specific factors like firm size, firm visibility, labor intensity, firm’s
financial position (measured as profitability, leverage, cash and equivalent
balance, and dividend payout), and the impact of natural disasters on CP.
Because this is the first study on this data set, we have employed exploratory
data analysis techniques and carefully consider the impact of outliers and
other non-standard features of the data. We have used Panel data analytic
techniques as well as the Tobit model to analyze the associations between
different firm specific factors and CP. We found that firm size, prior
profitability, and natural disaster have significant positive impact on CP. We
found no evidence that firms are using philanthropy for image creation.
Furthermore, exploratory data analysis shows that there are some clusters of
firms, which behave differently. Standard regression analysis techniques cannot
deal with such cases that require more sophisticated treatment.
Philanthropy, Firm Size, Natural Disaster, Cluster