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Religiosity and risk taking: Is there a demand-side effect?

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  • Berry-Stölzle, Thomas R.
  • Irlbeck, Steven

Abstract

Religiosity may impact firm risk taking via its risk averse employees or through risk-sensitive demand. Using detailed financial statements of property-liability insurance companies, we find that both religiosity at firms' headquarters and the religiosity of firms' largest geographic market are negatively related to firm risk taking. For firms with one salient market, the impact of market religiosity is approximately the same order of magnitude as headquarter religiosity. Our evidence suggests that firm risk taking is influenced by customer demand.

Suggested Citation

  • Berry-Stölzle, Thomas R. & Irlbeck, Steven, 2021. "Religiosity and risk taking: Is there a demand-side effect?," Journal of Corporate Finance, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:corfin:v:71:y:2021:i:c:s092911992100239x
    DOI: 10.1016/j.jcorpfin.2021.102117
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    More about this item

    Keywords

    Religiosity; Religious social norms; Risk taking; Risk-sensitive demand; Market discipline;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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