Communicating Culture Consistently: Evidence from Banks

48 Pages Posted: 3 Apr 2019 Last revised: 17 Jan 2020

See all articles by Jillian Grennan

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

Date Written: January 16, 2020

Abstract

Corporate culture is integral to business success, yet identifying when culture is misaligned with aspiration is challenging. This study shows a simple mechanism -- communicating culture consistently -- is linked to value creation. Using novel data from 300 U.S. banks reveals that the majority inconsistently communicate their cultural values across stakeholders (employees, investors, the community). Yet the banks that communicate consistently have better operating and stock performance. Employing an instrumental variables strategy that exploits unscripted moments from executives and evaluating placebo effects for traditional loans suggests the positive influence of culture stems from aligning expectations when unforeseen events arise.

Keywords: Corporate Culture, Bank Culture, Risk-Taking, Integrity, Values, Norms, Intangible Assets, Firm Value, Financial Crisis, Expectation Formation, Banking, Financial Intermediation, Financial Services, Labor and Finance, Personnel Economics

JEL Classification: D22, G01, G21, G30, M14, M48, M50, M54

Suggested Citation

Grennan, Jillian, Communicating Culture Consistently: Evidence from Banks (January 16, 2020). Available at SSRN: https://ssrn.com/abstract=3350645 or http://dx.doi.org/10.2139/ssrn.3350645

Jillian Grennan (Contact Author)

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 ( email )

Berkeley, CA 94720
United States

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