Does corporate philanthropic giving reduce analyst earnings dispersion? Evidence from Korea

This study investigates the relationship between corporate philanthropic giving and analyst earnings dispersion using Korean data from 2002 to 2015. Prior studies showed that philanthropic giving enhances financial performance and investment efficiency and reduces the risk that stock prices will crash. Despite the growing importance of corporate philanthropic giving, few studies examined how corporate giving affects analyst earnings dispersion. The empirical result suggests that, first, a higher level of corporate giving is significantly and negatively associated with analyst earnings dispersion. Second, the negative association between corporate giving and analyst earnings dispersion is more pronounced in nonchaebol firms. This study might be the first attempt to use qualified donation expense data in Korea to examine the direct association between corporate giving and analyst earnings dispersion.