A financial analysis into the nature of corporate giving.

Abstract

The analysis of giving is based on the reaction of giving to the following financial variables: the cost of giving, liquidity, financial leverage, advertising, unemployment level, return on equity, dividend payout, and officer compensation. The data used in the analysis was collected from Statistics of Income, Corporation Income Tax Returns, published for the years 1936 through 1973. The eight major industries and the aggregate of these industries were used in a multiple regression analysis of corporate giving. The statistical problems encountered by the use of this data, and the methods used to eliminate problems associated with multicollinearity, heteroscedasticity and autocorrelation are discussed.

The results of the regression analysis and the implications are presented. The interpretations of the regression analysis, supporting the profit motive and rejecting the through-the-firm consumption motive are included. This dissertation points out the improbability that giving will increase in response to the decrease in government expenditures, as anticipated by the present government administration.

This dissertation discusses the possible motives for corporate giving and the consequences of each to various government and business policies. Four major motives for giving are presented: the profit motive, the social responsibility motive, the through-the-firm consumption motive, and the pluralistic motive. A review of the literature is provided and includes the development of the theories of giving as influenced by tax laws and court decisions.