The Voice: the Shareholders' Motives Behind Corporate Donations During COVID-19

Abstract

What motivates shareholders to become prosocial activists? We exploit the onset of the COVID-19 pandemic as a natural experiment to study activism at S\&P500 firms. Large individual investors favored covid-related corporate donations to bolster their own images as these people are typically synonymous with the donating firms. Image gains instead do not pass through to institutional shareholders, and also due to the sinking stock market, these shareholders preferred to donate themselves rather than support donations at the firms in their portfolios. Our results point to media attention as a critical channel to incentivize institutional shareholders to support prosocial decisions.