The influence of MNE’s local reputation on the financial rents from responding to large disasters
Files
First author draft
Date
Authors
Ballesteros, Luis
Version
First author draft
OA Version
Citation
Ballesteros, Luis, The Influence of MNE's Local Reputation on the Financial Rents from Responding to Large Disasters (February 09, 2024). Available at SSRN: https://ssrn.com/abstract=4721289 or http://dx.doi.org/10.2139/ssrn.4721289
Abstract
I explore the financial implications of multinational enterprises’ (MNEs) philanthropic responses to international disasters. While MNEs have been the fastest-growing sector in disaster relief philanthropy, there is ambiguity surrounding the financial consequences of their donations. Using a firm’s country reputation as a theoretical lens, I posit that stakeholders are more influenced by a company’s pre-existing reputation than the actual donation amount when its social value is ambiguous. Employing a staggered difference-in-differences approach on data from 2005 to 2019, I find that initial donors with favorable country reputations experience unexpected gains compared to initial donors with an unfavorable reputation. Additionally, subsequent firms matching the donations of initial donors with good reputations also observed positive revenue effects. However, the impact is less clear for subsequent donors that diverged in donation amounts. The findings underscore the significance of MNE reputation in influencing stakeholder perceptions and consequent financial outcomes in disaster philanthropy. Furthermore, they challenge the prevailing notion that swift, large donations invariably lead to positive financial results, offering insights for more strategic philanthropic engagements in volatile contexts.