An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Jennifer C. Chen
Brigham Young University Hawaii

Robin W Roberts
University of Central Florida

Abstract: This study intends to understand or explain, from two competing perspectives, how corporate executives rationalize their philanthropic actions while their corporations are concurrently facing other business-related social issue. From a corporate social responsibility/performance perspective (Carroll, 1979), corporate charitable donations are expected to be negatively associated with firm-specific problems (e.g., poor performance records). Conversely, Dowling and Pfeffer, (1975) posit that charitable contributions are a means of legitimating business activities, which the relationship between corporate charitable contributions and firm-specific problems is expected to be positive. If this postulation is supported, the perceived merit of corporate charitable giving could be misleading. The study results indicate that corporate charitable contributions are a means of legitimation rather than a representation of corporate social performance.

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