Corporate insiders personal stock donation and CSR performance

What is it about?

This study examines the relationship between personal stock donation by top executives and board of directors (insiders) of publicly traded corporations and their personal tax, shareholders returns, and corporate social responsibility (CSR). This study finds that the timing of stock donations is driven by personal tax gain. The study further shows, comparing stock gift corporations relative to their non-stock gift cohorts yields lower short-term and long-term stock returns to shareholders. This implies that stock donation driven by insiders’ personal gain adversely affects shareholders’ wealth. However, the likelihood and intensity of insiders to make personal stock donation is reduced when firms have strong corporate social responsibility.

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Why is it important?

Corporate managers and insiders are less likely to time their stock donation for their personal gain for more socially responsible firms.