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The Value of Corporate Culture

Author

Listed:
  • Luigi Guiso

    (EIEF and CEPR)

  • Paola Sapienza

    (Northwestern University, NBER and CEPR)

  • Luigi Zingales

    (University of Chicago, NBER and CEPR)

Abstract

We study which dimensions of corporate culture are related to a firm’s performance and why. We find that proclaimed values appear irrelevant. Yet, when employees perceive top managers as trustworthy and ethical, firm’s performance is stronger. We then study how different governance structures impact the ability to sustain integrity as a corporate value. We find that publicly traded firms are less able to sustain it. Traditional measures of corporate governance do not seem to have much of an impact.

Suggested Citation

  • Luigi Guiso & Paola Sapienza & Luigi Zingales, 2013. "The Value of Corporate Culture," EIEF Working Papers Series 1327, Einaudi Institute for Economics and Finance (EIEF), revised Oct 2013.
  • Handle: RePEc:eie:wpaper:1327
    as

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    References listed on IDEAS

    as
    1. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2008. "Alfred Marshall Lecture Social Capital as Good Culture," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 295-320, 04-05.
    2. Guido Tabellini, 2008. "Presidential Address Institutions and Culture," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 255-294, 04-05.
    3. repec:hrv:faseco:30728046 is not listed on IDEAS
    4. repec:hoo:wpaper:e-89-7 is not listed on IDEAS
    5. Farrell, Joseph & Gibbons, Robert, 1989. "Cheap Talk with Two Audiences," American Economic Review, American Economic Association, vol. 79(5), pages 1214-1223, December.
    6. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    7. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2007. "Social Capital as Good Culture," NBER Working Papers 13712, National Bureau of Economic Research, Inc.
    8. Andrei Shleifer & Lawrence H. Summers, 1988. "Breach of Trust in Hostile Takeovers," NBER Chapters,in: Corporate Takeovers: Causes and Consequences, pages 33-68 National Bureau of Economic Research, Inc.
    9. Marco Pagano & Fabio Panetta & and Luigi Zingales, 1998. "Why Do Companies Go Public? An Empirical Analysis," Journal of Finance, American Finance Association, vol. 53(1), pages 27-64, February.
    10. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    11. Edmans, Alex, 2011. "Does the stock market fully value intangibles? Employee satisfaction and equity prices," Journal of Financial Economics, Elsevier, vol. 101(3), pages 621-640, September.
    12. João F. Gomes & Leonid Kogan & Motohiro Yogo, 2009. "Durability of Output and Expected Stock Returns," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 941-986.
    13. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2010. "Civic Capital as the Missing Link," NBER Working Papers 15845, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    1. The wage problem
      by chris dillow in Stumbling and Mumbling on 2013-11-02 18:34:30

    Citations

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    Cited by:

    1. Huang, Minjie & Li, Pingshu & Meschke, Felix & Guthrie, James P., 2015. "Family firms, employee satisfaction, and corporate performance," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 108-127.
    2. Gropp, Reint & Radev, Deyan, 2017. "Social centralization, bank integration and the transmission of lending shocks," SAFE Working Paper Series 174, Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.
    3. repec:spr:reaccs:v:23:y:2018:i:2:d:10.1007_s11142-017-9435-x is not listed on IDEAS
    4. Aleberto Alesina & Guido Tabellini & Francesco Trebbi, 2017. "Is Europe an Optimal Political Area?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 169-234.
    5. Stulz, Rene M., 2016. "Risk management, governance, culture, and risk taking in banks," Economic Policy Review, Federal Reserve Bank of New York, issue Aug, pages 43-60.
    6. Bargeron, Leonce & Lehn, Kenneth & Smith, Jared, 2015. "Employee–management trust and M&A activity," Journal of Corporate Finance, Elsevier, vol. 35(C), pages 389-406.
    7. repec:bla:jfinan:v:72:y:2017:i:4:p:1785-1824 is not listed on IDEAS
    8. Gropp, Reint E. & Radev, Deyan, 2017. "Social centralisation, bank integration and the transmission of lending shocks," IWH Discussion Papers 18/2017, Halle Institute for Economic Research (IWH).
    9. Francesco Feri, Caterina Giannetti, Pietro Guarnieri, 2017. "Risk taking for others: an experiment on ethics meetings," Discussion Papers 2017/229, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    10. René M. Stulz, 2014. "Governance, Risk Management, and Risk-Taking in Banks," NBER Working Papers 20274, National Bureau of Economic Research, Inc.
    11. Liu, Xiaoding, 2016. "Corruption culture and corporate misconduct," Journal of Financial Economics, Elsevier, vol. 122(2), pages 307-327.
    12. Benmelech, Efraim & Frydman, Carola, 2015. "Military CEOs," Journal of Financial Economics, Elsevier, vol. 117(1), pages 43-59.
    13. Lins, Karl & Servaes, Henri & Tamayo, Ane, 2015. "Social Capital, Trust, and Firm Performance during the Financial Crisis," CEPR Discussion Papers 10399, C.E.P.R. Discussion Papers.
    14. Jing Lin & Jianming Cai & Yan Han & He Zhu & Zhe Cheng, 2016. "Culture Sustainability: Culture Quotient (CQ) and Its Quantitative Empirical Application to Chinese Cities," Sustainability, MDPI, Open Access Journal, vol. 8(12), pages 1-12, November.
    15. Dong, Zhiqiang & Zhang, Yongjing, 2016. "Accumulated social capital, institutional quality, and economic performance: Evidence from China," Economic Systems, Elsevier, vol. 40(2), pages 206-219.
    16. repec:bla:jomstd:v:54:y:2017:i:4:p:403-421 is not listed on IDEAS
    17. repec:pjm:journl:v:xxiii:y:2018:i:1:p:3-24 is not listed on IDEAS
    18. repec:spr:reaccs:v:23:y:2018:i:2:d:10.1007_s11142-018-9442-6 is not listed on IDEAS
    19. Karl V. Lins & Henri Servaes & Ane Tamayo, 2017. "Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility during the Financial Crisis," Journal of Finance, American Finance Association, vol. 72(4), pages 1785-1824, August.

    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Z1 - Other Special Topics - - Cultural Economics

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