Political connection, family ownership and corporate philanthropy: empirical evidence from Jordan

Abstract

PurposeA key goal of this research is to examine empirically whether politically connected board members are likely to impact corporate philanthropy. A further goal of this study is to contribute to the existing literature by examining the moderating role of political connections on the relationship between family ownership and corporate donations.Design/methodology/approachBased on the content analysis approach, the authors determined the level of cash and in-kind donations made by a group of 94 non-financial Jordanian companies listed on the Amman Stock Exchange. This study examined 658 annual reports spanning over seven years from 2010 to 2016. Ordinary least squares regression (OLS) is used to test the study hypotheses. In addition, this study used the probit regression to validate those results reported by the OLS regression.FindingsCompared to unconnected companies, politically connected companies in Jordan are more likely to donate to philanthropic causes. Moreover, the results revealed that the presence of significant family ownership shareholding in a firm can weaken the firm tendency to donate. Despite this, the regression analysis results indicate that family-controlled firms with political connections are more likely to engage in charitable giving activities compared to those without political nexuses.Research limitations/implicationsThe study contributes to the conversation surrounding corporate giving and sheds light on the role political connections and ownership structure (particularly family-owned firms) play in affecting donations by firms.Practical implicationsManagers of Jordanian firms listed on the stock exchange can use the study's findings to make better decisions about their donations and other philanthropic activities.Originality/valueThis study is the first to examine the relationship between firm donations and political connections in Jordan, and how political nexuses can moderate the relationship between family ownership and corporate donations. Hence, it extends prior research significantly.