Does the market value corporate philanthropy? Evidence from the response to the 2004 tsunami relief effort

This study investigates the market reaction to corporate press releases announcing donations to the relief effort following the December, 2004 tsunami in Southeast Asia. Based on a sample of 79 U. S. companies, results indicate a statistically significant positive 5-day cumulative abnormal return. While differences in the timing of the press releases do not appear to have influenced market reactions, the amount of the donations did. Overall, the results appear to support Godfrey's (Academy of Management Review 30, 777-798; 2005) assertion that philanthropic giving must be perceived as being a genuine manifestation of the firm's underlying social responsiveness in order to increase firm value.