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Prof. Vivian Fang
Professor of Finance
​Richard E. Jacobs Chair in Finance
Kelley School of Business | ​Indiana University

We examine corporate philanthropy as a signal of firm product quality under limited attention. Linking local charitable donations to sales, we find no average effect but a strong fourth-quarter (Q4) lift, especially for firms with Q4-seasonal product mixes. The Q4 effect is also larger when the signal is likely more valuable: in weaker local economies where product quality matters more for consumers’ purchase decisions; in more competitive markets where differentiation relies more on non-price signals; for firms with more geographically concentrated sales where attribution is clearer; and after negative product incidents when uncertainty about quality is higher. Overall, the results highlight an informational role of charitable donations, but only when consumers attend to and value such information.