Religion and Ownership

61 Pages Posted: 12 Jul 2019

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 & Management gemeinnützige GmbH - Accounting Department

Nina Schwaiger

LMU Munich

Date Written: July 11, 2019

Abstract

This study examines the effect of religion on ownership structures. In particular, we expect that the local strength of Protestantism will reduce ownership concentration and insider ownership. Protestantism is less hierarchical than Catholicism, which suggests that adherents of the Protestant faith will have a strong preference for autonomy. Moreover, they rely strongly on horizontal ties between fellow citizens, which encourages trust and reduces a shareholders’ need to monitor a firms’ employees. Our identification is based on a panel regression, a geographical regression discontinuity design, a difference design, and an instrumental variable approach. In line with our predictions, we find that the local strength of Protestantism reduces ownership concentration and insider ownership. A subsequent channel analysis suggests that the local strength of Protestantism has a negative direct effect on blockholder ownership and a negative indirect effect on the size of shareholding and insider ownership through developing trust. Overall, our results underline the role of the demographic features of firms’ geographic environments in explaining ownership structures.

Keywords: Protestantism, hierarchy, ownership concentration, insider ownership, trust

JEL Classification: G32, N3

Suggested Citation

Hofmann, Christian and van Lent, Laurence and Schwaiger, Nina, Religion and Ownership (July 11, 2019). 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 & Management gemeinnützige GmbH - Accounting Department ( email )

Adickesallee 32-34
Frankfurt, 60322
Germany
+4969154008531 (Phone)

Nina Schwaiger (Contact Author)

LMU Munich ( email )

Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
54
Abstract Views
272
rank
375,340
PlumX Metrics