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Cambridge Journal of Economics Advance Access originally published online on April 4, 2005
Cambridge Journal of Economics 2005 29(4):517-534; doi:10.1093/cje/bei036
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© The Author 2005. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Profit maximisation vs. agency: an analysis of charitable giving by UK firms

Stephen Brammer and Andrew Millington*

* University of Bath, UK

Address for correspondence: Stephen Brammer, University of Bath, Claverton Down, Bath BA2 7AY, UK; email: mnssjab{at}management.bath.ac.uk.

The charitable giving of a large sample of publicly quoted UK firms is analysed within a model that explores the profit maximisation and managerial utility enhancement motives for giving. The empirical method draws a distinction between the decision to participate in giving and the determination of the amount of corporate contributions. Firm size and advertising intensity are found to be positively associated with the probability of participation in giving. Stricter corporate governance and the rate of directors' remuneration are negatively related to the probability of participation. Among givers, the rate of giving is related positively to R&D intensity, the rate of directors' remuneration, and corporate profitability and negatively to firm indebtedness.

Key Words: Corporate social responsibility • Charitable giving

JEL classifications: L21, G30

Manuscript received November 18, 2002; final version received July 7, 2003.


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