Religion and Ownership

80 Pages Posted: 12 Jul 2019 Last revised: 8 Sep 2021

See all articles by Christian Hofmann

Christian Hofmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Laurence van Lent

Frankfurt School of Finance and Management

Nina Schwaiger

LMU Munich

Date Written: August 17, 2021

Abstract

This study examines if geographical variation in the dominant religion of a firm’s location is associated with corporate ownership structures as a governance mechanism to address agency conflicts within firms. We contrast two Christian faiths, Protestantism and Catholicism, which—despite theological similarities—have been associated with contrasting preferences for autonomy and reliance on trust. We address identification challenges by combining evidence from panel regressions, geographical regression discontinuity design, and instrumental variable estimation. We find that the local strength of Protestantism reduces ownership concentration. A subsequent analysis suggests that the local strength of Protestantism directly affects blockholder ownership, whereas the effect on shareholding size and insider ownership is indirect through trust.

Keywords: Protestantism; hierarchy; ownership concentration; monitoring; governance; trust

JEL Classification: G32; M2; M41; N3

Suggested Citation

Hofmann, Christian and van Lent, Laurence and Schwaiger, Nina, Religion and Ownership (August 17, 2021). TRR 266 Accounting for Transparency Working Paper Series No. 3, Available at SSRN: https://ssrn.com/abstract=3418222 or http://dx.doi.org/10.2139/ssrn.3418222

Christian Hofmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Laurence Van Lent

Frankfurt School of Finance and Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

HOME PAGE: http://www.laurencevanlent.org

Nina Schwaiger (Contact Author)

LMU Munich ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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