Do enterprises with foreign direct investments in tax havens prefer charitable donations? Evidence from China

This study investigates the relationship between tax havens and charitable donations based on signaling theory and the moderating effects of family ownership and slack resources on the main effect. Multiple regression analysis is applied to a sample of publicly listed Chinese companies with outward foreign direct investment (OFDI). We find that enterprises minimize the potential impact of tax havens through charitable donations, despite the ambiguity created by the choice of tax havens. Furthermore, family firms with OFDI in tax havens are more likely to make charitable donations than non-family firms, and family firms are less likely to make charitable donations than non-family firms when they have abundant slack resources.