Control Variables

Size

Size has often been investigated in prior CCI studies (Levy and Shatto, 1978;

Burke et al., 1986; Useem, 1988; Navarro, 1988; Arupalam and Stoneman, 1995;

Adams and Hardwick, 1998; Dennis et al., 2007). For example, Brammer and Millington (2004a) reported that company size is an important correlate of visibility, reasoning that large firms make a high level of charitable donations because they exhibit this feature and as a result society may put pressure on them to give more. Their later research confirmed that more pressure from their stakeholders than from smaller firms increases the amount of firms’ corporate charitable contributions significantly (Brammer and Millington 2004b). Seifert et al. (2004) similarly contended that large firms have greater visibility, which attracts greater public scrutiny and hence, a higher standard of corporate citizenship. As a result of the observations of the existing studies it is predicted here that CCI activity is strongly positively correlated with size.

Industry

The empirical literature on CCI, has found that industry differences are an important determinant of corporate giving (Useem, 1988; Arupalam and Stoneman, 1995; Adam and Hardwick, 1988). That is, firms in the same industry face the same environmental conditions and this tends to streamline their involvement in corporate giving (Seifert et al., 2003). Moreover, Brammer and

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Millington (2004a), after considering companies which operate in consumer goods, are high-wage and are stiffly regulated, argued that industry type and structure may have a significant impact on the delegation of the management of corporate donations. Additionally, Amato and Amato (2007) found that industry type explains 20-22% of the total variation in giving.

Company Ownership

The influence of corporate ownership on corporate contributions is another topic of interest in the debates pertaining to the field of CCI (Bartkus et al., 2002;

Zhang et al., 2009). More specifically, most of the studies have analysed the relationship between giving to charitable causes and the availability of stock held by insiders (Atkinson and Galaskiewicz, 1988; Wang and Coffey, 1992; Bartkus et al., 2002). Additionally, whether a firm is state owned or not (Zhang et al., 2009) or whether it is local or a subsidiary of a foreign multinational firm (CECP, 2009), has been found to determine the amount that companies choose to donate.

7.3 Methods

In order to test the hypotheses put forward in the previous section, estimates are made for the equation put forward in Section 7.2 for CCI as a whole as well as for the four different types. The data were obtained from questionnaires which can be found in Appendices 4 and 5 and the details of how this was collected has been explained in the methodology chapter (Chapter 4). As explained previously, 92 responses were received, however, some companies refused to disclose the total amount they spent on CCI and there is also missing data from the part of the questionnaire enquiring about slack resources, as explained below. As a result of the former situation, the total number of observations was reduced to 76 companies for this study.

159 7.3.1 Dependent Variables

As explained in the literature review of Chapter 2, prior studies have tended to address corporate philanthropic giving and CCI separately. Regarding this, corporate philanthropy has been measured by defining the total amount of money given in donations (Arupalam and Stoneman, 1995; Adams and Hardwick, 1998;

Brammer and Millington, 2004a; Gan, 2006; Brown et al., 2006), whereas CCI has been taken as being the amount of pre-tax profit that companies give for community investment (Atkinson and Galaskiewicz, 1988; Brammer and Millington, 2003) or the total amount of cash contribution, which includes both philanthropic giving and giving for strategic purposes (Brown et al., 2006). As pointed out earlier, the lack of availability of companies’ financial reports or other databases containing these types of information for companies in Turkey has meant that the primary data taken from the survey are to be used in this particular study. The companies concerned were probed about their donation amounts for four measures of CCI, namely: cash giving, sponsorship, cause-related marketing, gifts in kind (e.g. companies were asked, “Approximately how much cash has your company donated to charitable/philanthropic giving in the last year?” and so on) and these were subsequently aggregated. 16 different intervals of money amounts were specified for the respondents and the mid value of the interval selected was taken as the value for the analysis.

When it came to assigning scores to the different CCI types, it soon became apparent that the donations were heavily biased towards cash giving and after some preliminary analysis it emerged that for consistent investigation across all four types of giving there would have to be a very low cut off point if meaningful results were to be achieved. That is, because many firms do not engage in these other aspects or only to a limited extent, skewness was found to be a problem that needed to be overcome. Therefore, initially a relatively low 20% was chosen for each type to represent the boundary in terms of the binary variables for each CCI form, i.e. a 1 allocated for this score and above and 0 otherwise. However, even this failed to produce any meaningful outcomes and it had to be reduced further to 10%, before this was the case. Moreover, in similar studies it has been common

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practice to take the log of total giving as the dependent variable rather than actual values as this linearises the data to achieve greater accuracy (Buchholtz et al., 1999 and Campbel et al., 1999). To summarise, the dependent variables are defined as follows:

Total CCI giving: Log of the total amount of CCI For the binary variables a score of 1 is allocated when:

1) Cash giving is 10% or more of the total 2) Sponsorship is 10% or more of the total

3) Cause-Related Marketing: 10% or more of the total 4) Gifts-in-kind: is 10% or more of the total