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Religiosity and Risk Taking: Is There a Demand-Side Effect?

Journal of Corporate Finance, Forthcoming https://authors.elsevier.com/sd/article/S0929-1199(21)00239-X

Posted: 18 Sep 2019 Last revised: 26 Oct 2021

See all articles by Thomas Berry-Stölzle

Thomas Berry-Stölzle

University of Iowa - Department of Finance

Steven Irlbeck

University of New Hampshire

Date Written: June 19, 2019

Abstract

Religiosity may impact firm risk taking via its risk averse employees or through risk-sensitive demand. Using detailed financial statements of property-liability insurance companies, we find that both religiosity at firms’ headquarters and the religiosity of firms’ largest geographic market are negatively related to firm risk taking. For firms with one salient market, the impact of market religiosity is approximately the same order of magnitude as headquarter religiosity. Our evidence suggests that firm risk taking is influenced by customer demand.

Keywords: Religiosity, religious social norms, risk taking, risk-sensitive demand, market discipline

JEL Classification: G32, G22, M14, Z12

Suggested Citation

Berry-Stölzle, Thomas and Irlbeck, Steven, Religiosity and Risk Taking: Is There a Demand-Side Effect? (June 19, 2019). Journal of Corporate Finance, Forthcoming https://authors.elsevier.com/sd/article/S0929-1199(21)00239-X, Available at SSRN: https://ssrn.com/abstract=3450682 or http://dx.doi.org/10.2139/ssrn.3450682

Thomas Berry-Stölzle

University of Iowa - Department of Finance ( email )

Iowa City, IA 52242-1000
United States

Steven Irlbeck (Contact Author)

University of New Hampshire ( email )

Durham, NH 03824
United States

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