Corporate Culture and Banking
45 Pages Posted: 23 Dec 2015 Last revised: 17 Jun 2018
Date Written: January 12, 2016
This paper empirically analyzes the role of corporate culture in banking. We define culture based on the Competing Value Framework (Quinn and Rohrbaugh, 1983) and find that banks with a more pronounced competition-oriented culture have stronger bonus-focussed compensation schemes, while banks with a strong focus on creativity show higher bankruptcy risk. These findings suggest that risk management practices are not merely driven by incentives from compensation schemes, but rather driven by differences in corporate culture.
Keywords: corporate culture; Competing Value Framework; CEO compensation; stock returns; bankruptcy risk.
JEL Classification: G21, G34, M14
Suggested Citation: Suggested Citation