Corporate Culture: Evidence from the Field

133 Pages Posted: 9 Jul 2016 Last revised: 28 Jul 2022

See all articles by John R. Graham

John R. Graham

Duke University; National Bureau of Economic Research (NBER)

Jillian Grennan

Santa Clara University, Leavey School of Business; Santa Clara University School of Law; University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Campbell R. Harvey

Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER)

Shivaram Rajgopal

Columbia University - Columbia Business School, Accounting, Business Law & Taxation

Multiple version iconThere are 2 versions of this paper

Date Written: April 26, 2022

Abstract

Ninety-two percent of the 1,348 North American executives we survey believe that improving corporate culture would increase firm value. A striking 84% believe their company needs to improve its culture. But how can that be achieved? Our paper provides some guidance by documenting the following: executives' views on what corporate culture is and how it operates, distinguishing between stated values and everyday norms; the extent to which culture is perceived to influence value creation (productivity, mergers), ethical choices (compliance, short-termism), and innovation (creativity, risk-taking); and a list of obstacles that can prevent culture from being where it should be (inattentive leaders, misaligned incentive compensation). Finally, we provide evidence that the executives' survey responses are consistent with external data.

See our related paper: Corporate Culture: The Interview Evidence.

Keywords: Corporate Culture, Values, Norms, Leadership, Corporate Governance, Incentive Compensation, Informal Institutions, Intangible Assets, Valuation, Finance, Risk-taking, Short-termism, Myopia, Innovation, Firm Value, Productivity, M&A valuation, Integrity, Trust, Ethics, Compliance, Earnings Management

JEL Classification: G3, Z1, D23, G23, G30, K22, M14, O16

Suggested Citation

Graham, John Robert and Grennan, Jillian and Harvey, Campbell R. and Rajgopal, Shivaram, Corporate Culture: Evidence from the Field (April 26, 2022). Journal of Financial Economics (JFE), Forthcoming, 27th Annual Conference on Financial Economics and Accounting Paper, Columbia Business School Research Paper No. 16-49, Duke I&E Research Paper No. 2016-33, Available at SSRN: https://ssrn.com/abstract=2805602 or http://dx.doi.org/10.2139/ssrn.2805602

John Robert Graham

Duke University ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7857 (Phone)
919-660-8030 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jillian Grennan

Santa Clara University, Leavey School of Business ( email )

Santa Clara, CA 95053
United States

Santa Clara University School of Law ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Berkeley, CA 94720
United States

Campbell R. Harvey (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7768 (Phone)

HOME PAGE: http://www.duke.edu/~charvey

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Shivaram Rajgopal

Columbia University - Columbia Business School, Accounting, Business Law & Taxation ( email )

3022 Broadway
New York, NY 10027
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
8,310
Abstract Views
29,605
rank
1,039
PlumX Metrics