Fifty Shades of Corporate Culture

62 Pages Posted: 11 Mar 2016 Last revised: 1 Jul 2016

William David Grieser

Tulane University

Nishad Kapadia

Tulane University - A.B. Freeman School of Business

Rachel Li

Michigan State University

Andrei Simonov

Michigan State University - Eli Broad Graduate School of Management; Gaidar Institute for Economic Policy; Centre for Economic Policy Research (CEPR); SITE

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Date Written: June 28, 2016

Abstract

We develop a new measure of integrity as it relates to corporate culture - the number of employees who use corporate emails to register for a website that facilitates extramarital affairs. This measure is associated with firm-level unethical behavior: it predicts a greater probability of SEC enforcement actions for accounting misstatements, and lower corporate ethics ratings by external analysts. However, consistent with research in psychology, we find that the measure also predicts more innovation (R&D intensity, successful patenting rates, subsequent patent citations, and patent diversity) and risk-taking (leverage, volatility, probability of default). Our results suggest that it is difficult to engineer a perfect corporate culture due to potential trade-offs between employee creativity, risk-taking, and integrity.

Keywords: Corporate culture, Integrity, Creativity, R&D

JEL Classification: M14, G03

Suggested Citation

Grieser, William David and Kapadia, Nishad and Li, Rachel and Simonov, Andrei, Fifty Shades of Corporate Culture (June 28, 2016). Available at SSRN: https://ssrn.com/abstract=2741049

William David Grieser (Contact Author)

Tulane University ( email )

A.B. Freeman School of Business
7 McAlister Drive
New Orleans, LA 70118
United States

HOME PAGE: http://www.williamgrieser.com

Nishad Kapadia

Tulane University - A.B. Freeman School of Business ( email )

A.B. Freeman School of Business
7 McAlister Drive
New Orleans, LA 70118
United States
504-314-7454 (Phone)

Qingqiu Li

Michigan State University ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

Andrei Simonov

Michigan State University - Eli Broad Graduate School of Management ( email )

645 N. Shaw Lane, 321 Eppley Center
East Lansing, MI 48824-1122
United States

HOME PAGE: http://www.andreisimonov.com

Gaidar Institute for Economic Policy ( email )

3-5 Gazetny Lane
Moscow, 125009
Russia

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

SITE ( email )

P.O. Box 6501
S-113 83 Stockholm, 11383
Sweden

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