Do Progressive Social Norms Affect Economic Outcomes? Evidence from Corporate Takeovers

Abstract

This paper investigates how religion-induced attitudes toward change and diversity affect corporate acquisition decisions. By studying the variation in religious adherence across U.S. counties, we find that acquirer announcement returns and total synergy are larger in counties in which progressive religious denominations are popular. In contrast, conservative religious denominations affect neither acquirer announcement returns nor total synergies. Our evidence indicates that religion-induced social norms are an important driver of large corporate transactions, while various religious denominations affect corporate outcomes differently.

Keywords: Religion, Corporate takeovers, Mainline Protestants, Behavioral finance

JEL Classification: G34, Z1, G32