Seeking blessings by doing good: Top executive superstitions and corporate philanthropy

Abstract

Corporate giving is a substantial expenditure for firms. However, understanding the motives behind such spending remains challenging. This study tests the agency motive of corporate philanthropy by investigating top executives' zodiac year superstition, a culturally embedded, time-varying phenomenon. We find that firms led by board chairs in their zodiac years exhibit a significant increase in charitable donations, with the effects being stronger for firms led by board chairs with lower educational attainment and a lack of overseas experience, as well as non-state owned firms, underperforming firms, and firms with weak corporate governance. Furthermore, these increases in charitable donations are temporary and do not translate into long-term philanthropic commitments or improved firm performance, corroborating their agency-driven nature. Overall, our study provides new insights into the role of managerial beliefs and preferences in shaping corporate behavior.