Corporate Philanthropy and Firm Value in Africa: A case study of Selected Firms in South Africa

This study sought to investigate the relationship between corporate philanthropy and firm value in Africa, using firms listed on the Johannesburg Securities Exchange as the representative sample. The analysis discovered that only 25 firms had complete data over a short period of 11 years resulting in a panel of 255 firm-year observations. The study established that Corporate Donations in South Africa is moderately nascent but has been growing steadily over the last few years. With only 13 firms involved in corporate donations by the year 2008, the number is found to be ten times by the end of 2018. Using the panel ordinary least squares model, results revealed that four variables, including the corporate social responsibility index, positively influenced firm value. The study also investigated the motives for corporate philanthropy. Results indicated that the book value of a firm, sales revenue size (total assets), leverage, and corporate social responsibility reporting significantly influenced a firm’s decision to donate to charity. The findings indicate that a firm’s participation in charity is a long-term strategic commitment for financial returns to all corporate stakeholders.