Religion and Corporate (Mis)Behavior

39 Pages Posted: 12 Sep 2009 Last revised: 16 Mar 2010

See all articles by Gustavo Grullon

Gustavo Grullon

Rice University - Jesse H. Jones Graduate School of Business

George Kanatas

Rice University - Jesse H. Jones Graduate School of Business

James Weston

Rice University - Jesse H. Jones Graduate School of Business

Date Written: September 8, 2009

Abstract

We provide evidence that religiosity deters unethical corporate behavior. Firms headquartered in highly religious counties are less likely to backdate options, grant excessive compensation packages to their managers, practice aggressive earnings management, and be the target of class action securities lawsuits. Our results are strongest for locations with greater concentrations of Protestants, and especially of Mainline Protestants. Finally, we find that a regulatory change designed to curb option backdating has had a much larger effect in less religious counties, suggesting that in this case regulation and religion are substitute mechanisms for monitoring and control.

Suggested Citation

Grullon, Gustavo and Kanatas, George and Weston, James Peter, Religion and Corporate (Mis)Behavior (September 8, 2009). Available at SSRN: https://ssrn.com/abstract=1472118 or http://dx.doi.org/10.2139/ssrn.1472118

Gustavo Grullon

Rice University - Jesse H. Jones Graduate School of Business ( email )

P.O. Box 2932
Houston, TX 77252-2932
United States
(713) 348-6138 (Phone)
(713) 348-6331 (Fax)

HOME PAGE: http://www.ruf.rice.edu/~grullon/

George Kanatas

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
713-348-5383 (Phone)
713-348-5251 (Fax)

James Peter Weston (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005
United States
713-348-4480 (Phone)
713-348-6331 (Fax)

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