Corporate Culture and Firm Value: Evidence from Crisis
64 Pages Posted: 2 Jul 2020 Last revised: 1 Nov 2022
Date Written: October 25, 2022
Based on the Competing Values Framework (CVF), we score 10-K text to measure company culture in four types (collaborative, controlling, competitive, and creative) and examine its role in firm stability. We find that firms with higher controlling culture fared significantly better during the 2008-09 crisis. Firms with stronger controlling culture experienced fewer layoffs, less negative asset growth, greater debt issuance, and increased access to credit-line facilities during the crisis. The positive effect of the controlling culture is stronger among the financially-constrained firms. Overall, the controlling culture improves firm stability through greater support from capital providers.
Keywords: Corporate Culture; Competing Values Framework; Textual Analysis; Financial Crisis; Abnormal Returns; Firm Stability
JEL Classification: G01, M14
Suggested Citation: Suggested Citation