Doing good deeds in times of need: A strategic perspective on corporate disaster donations

Alan Muller, Roman Kräussl

Research output: Contribution to journalArticleAcademicpeer-review

143 Citations (Scopus)

Abstract

Major corporations often respond charitably in times of disaster. However, disasters can also impose nontrivial costs on firms themselves, and under adverse conditions, firms typically donate less, not more. This paper takes a strategic perspective on corporate magnanimity in times of crisis by looking at the relationship between firm value, reputation, and donations by U.S. Fortune 500 firms in the case of Hurricane Katrina. In general, we find that Katrina's landfall was associated with significant negative abnormal stock returns. In particular, we find that a reputation for social irresponsibility was associated with both the greatest drop in stock prices and the greatest likelihood of making a subsequent charitable donation in response to the disaster.
Original languageEnglish
Pages (from-to)911-929
Number of pages19
JournalStrategic Management Journal
Volume32
Issue number9
Publication statusPublished - 2011
Externally publishedYes

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