The Impact of Investing in Philanthropic Activities on the Firm's Cost of Equity
Subject Areas :
مهدی
صفری گرایلی
1
(گروه حسابداری، واحد بندرگز، دانشگاه آزاد اسلامی، بندرگز، ایران)
یاسر
رضائی پیته نوئی
2
(استادیار گروه مدیریت، دانشکدۀ ادبیات و علوم انسانی، دانشگاه گیلان، رشت، ایران.)
Received: 2021-07-02
Accepted : 2021-09-06
Published : 2021-11-15
Keywords:
Cost of Equity Capital,
Social Responsibility,
Keywords: Philanthropic Activities,
Abstract :
Nowadays, investing in philanthropic activities as a part of social responsibility has become more and more important, as it is expected to have important implications for corporate strategic planning and business risk. Therefore, the present study investigates the impact of philanthropic activities on corporate cost of equity. For this purpose, firm’s donations to charitable and beneficial organizations are used to measure philanthropic activities, as well as OSM and capital asset pricing model were employed to measure the cost of equity. The research hypothesis was also investigated using a sample of 63 companies listed in Tehran Stock Exchange by using multi-variable regression model based on panel data technique and Eviews econometric software. The results showed that investing in philanthropic activities reduces the cost of equity capital. Also, the results of the sensitivity analysis test indicate that the use of alternative measure for cost of equity capital has no effect on the main results of the study and our results are robust. The findings of this study not only fill the gap in the field, but also help managers, investoes and capital market regulators make informed decisions.
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