The Relationship between Corporate Philanthropy and Stock Price Crash Risk with an Emphasis on Information Asymmetry

Corporate Philanthropy is a corporate marks with philanthropy strategy that refers to highest level of corporate social responsibility. This view has an orientation to present a concept of philanthropy activities that provides background of profitable activities, reduces conflicts of interest between interested groups, and help to achieve the stability of economic through creating the sustainable society, healthy environment and transparent political climate. . Hence, this study examines the relationship between corporate philanthropy and stock price crash risk with an emphasis on information asymmetry at companies listed in Tehran Stock Exchange. In this regard 65 companies for period of2009- 2014, were selected. For measuring corporate philanthropy use cash and noncash contributions, as well as to measure stock price crash risk, index of negative coefficient of skewness and down to-up volatility has been used. The results showed that there is a significant negative relationship between corporate philanthropy and stock price crash risk. Also, by considering growth opportunities observation of firm years were divided into with up and down information asymmetry. The results showed that the negative relationship between corporate philanthropy and stock price crash risk is more severe for companies with high information asymmetry. The results suggest that corporate philanthropy economic consequences such as reduced stock price volatility which increases responsibility and makes managers less willing to hoarding bad news.