Corporate Culture: Evidence from the Field

101 Pages Posted: 9 Jul 2016 Last revised: 27 Jun 2019

See all articles by John R. Graham

John R. Graham

Duke University; National Bureau of Economic Research (NBER)

Jillian Grennan

Duke University - Fuqua School of Business; Duke Innovation & Entrepreneurship Initiative

Campbell R. Harvey

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

Shivaram Rajgopal

Columbia Business School

Multiple version iconThere are 2 versions of this paper

Date Written: June 26, 2019

Abstract

Ninety-two percent of the 1,348 North American executives we survey believe that improving culture would increase firm value. A striking 84% believe they need to improve their culture. But how can that be achieved? Our paper provides some guidance. First, we directly link culture to financial value. Second, we detail the important distinction between stated cultural values and what actually happens within the firm. Third, we study the specific mechanisms and provide evidence that links culture to ethical choices (compliance, short-termism), innovation (creativity, risk-taking), and value creation (productivity, mergers and acquisitions).

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 (June 26, 2019). 27th Annual Conference on Financial Economics and Accounting Paper; Duke I&E Research Paper No. 2016-33; Columbia Business School Research Paper No. 16-49. 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

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
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 Business School ( email )

3022 Broadway
New York, NY 10027
United States

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