**5. Conclusion**

Companies that are not profitable or are losing money do not have money to give away for public goods. The US companies which dominate the most charitable list of Motley Fool share a common attribute - there are considerable barriers to entry, for example, the pharmaceutical companies on the list are Pfizer, Gilead, Merck, Bristol Myers Squibb, and Eli Lily, all have block buster drug patents that generate millions in profits for the companies. These health care companies may be trying to change the narrative when it comes to negative media attention about outlandish drug prices. For example, President Donald Trump tweeted on March 7, 2017: "I am working on a new system where there will be competition in the drug industry.

In the technology industry, Alphabet (parent company of Google), Microsoft, and Cisco also appear on the Motley Fool's 12 most charitable US companies list. These high-technology companies are highly profitable and due to their market dominant position they possess, market power. Moreover, their leading position creates a significant barrier to entry for competitors. What is driving these companies to make charitable contributions? One research study found that people received greater happiness from giving away money to others rather than spending money on themselves [37]. In corporate giving, Alphabet has taken this approach in its corporate gifts as it has provided money to its clients to donate to charity, where the client chooses who receives the donation via the nonprofit web site. Such actions by Alphabet promote Google's mantra of "don't be evil" while earning loyalty and respect of its employees

Financial companies Goldman Sachs and Wells Fargo appear on the charitable list as well. It is ironic that Wells Fargo appears on the most charitable list, given since 2009 to 2015 Wells Fargo created 3.5 fake bank and credit card accounts. In an effort to re-gain consumer and public trust Wells Fargo may feel compelled to continue to make charitable contributions in an attempt to change the perception of Wells Fargo. The financial industry also has significant barriers to entry with the market structure being monopolistically competitive. Charitable contributions by financial institutions are not limited to the United States, since in the United Kingdom the industry sector with the largest average cash and in-kind gifts occurs in the

One of the most competitive industries in the United States is the airline industry. Since September 11, 2001 there have been 12 chapter 7 filings (company closes) and 29 chapter 11 filings (re-organization). Of the four largest US carriers today, three of them (American Airlines, United Airlines, and Delta Airlines) were at some point in Chapter 11 bankruptcy since 2001. The remaining exception is Southwest Airlines which has never declared bankruptcy. Hence, we should expect to find larger charitable contributions for Southwest Airlines compared to its peers. In 2017, Southwest Airlines provided nearly 39,000 free flights for a combined value of more than \$19 million in total charitable gifts [39]. In 2016, American Airlines provided

Next, we examine reasons beyond profitability to explain corporate social responsibility. Some businesses may choose to make charitable contributions in lieu of advertising/marketing expenditures as these businesses may see the chance for possible public recognition as "free" advertising and marketing. For example, Texas Roadhouse operates in such a fashion

Pricing for the American people will come way down!" [36].

and clients.

108 Firm Value - Theory and Empirical Evidence

finance industry [38].

\$23.5 million in total charitable giving [40].

Companies may feel compelled to undertake socially responsible actions for a variety of reasons including to lower their taxable earnings, to become a fabric of the community, to encourage consumer loyalty, foster employee pride/satisfaction, and to receive "free" advertising/publicity. Companies that are more inclined to make charitable contributions may also have more profits to share with the community. Moreover, the most charitable companies in the USA possess the characteristics of being both highly profitable and these companies have a market dominant position in their industry, which may explain why high technology, big pharmaceutical companies, and large financial institutions predominantly comprise the most charitable companies in the United States. There is overwhelming evidence provided on both continents that firms which engage in corporate social responsibility have higher firm valuations. At the heart of these companies that voluntarily choose to go above and beyond by making contributions to society is the creation of trust. This trust encourages loyalty among consumers and loyalty among employees. When financial difficulty does arise, this loyalty that companies have accrued through being good corporate citizens gets repaid in terms of better stock market performance during the financial crisis.

Empirical studies confirm the positive impact of corporate social responsibility on firm value. Yet, there are different types of socially responsible actions, such as environmental and social compliance, donation to charitable causes, and public good linked products. Their impacts may realize in investors' expectation of a better company perspective or in consumer's preferences bringing in a higher product demand. Future research may aim to identify and distinguish the quantitative effects from different responsible actions and different channels. Theoretical models study in various market situations, how corporate social responsibility affect firms' value and competition. In the market, a firm's decision to contribute to the public is influenced by the interactions among consumers, investors, managers, and activists. The firm contributes to the public good through joint production of monetary giving. Firms compete in market structures of different degrees of competitiveness. Socially responsible actions can increase firm value via demand increases. These demand increases are usually exogenously assumed without a market foundation. Recent approaches embed demand increase in the competition among firms in the full market of industry equilibrium. Corporate giving is endogenized as one among other market strategies of firms, like price and output quantity. This research direction is fruitful and there is a need for empirically testable models. In a competitive market, perfectly or imperfectly, we can examine and test the substitutability of corporate social responsibility for other market strategies. For example, spending on corporate giving may crowed out investment, advertisement, and product development. We also need a well-defined welfare comparison for the effects of increased public good and efficiency loss in the market. This is a growing area that bridges business strategy and the provision of public good.

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