Corporate Culture and Firm Value: Evidence from Crisis

66 Pages Posted: 2 Jul 2020 Last revised: 15 Jul 2021

See all articles by Yiwei Fang

Yiwei Fang

Illinois Institute of Technology

Franco Fiordelisi

University of Essex - Essex Business School

Iftekhar Hasan

Fordham University ; Bank of Finland; University of Sydney

Woon Sau Leung

The University of Edinburgh Business School, The University of Edinburgh

Gabriel Wong

Cardiff University - Cardiff Business School

Date Written: July 1, 2021

Abstract

Measuring company culture in four types (collaborate, control, compete, and create) using 10-K text, we examine the role of culture in firm stability. We find that firms with higher controlling culture fared significantly better during the 2008-09 crisis. The results are robust to using alternative measures of firm performance and examining alternative crisis episodes. 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 valuation effect of controlling culture is stronger among 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, Stability

JEL Classification: G01, M14

Suggested Citation

Fang, Yiwei and Fiordelisi, Franco and Hasan, Iftekhar and Leung, Woon Sau and Wong, Gabriel, Corporate Culture and Firm Value: Evidence from Crisis (July 1, 2021). Available at SSRN: https://ssrn.com/abstract=3623400 or http://dx.doi.org/10.2139/ssrn.3623400

Yiwei Fang

Illinois Institute of Technology ( email )

Stuart Graduate School of Business
565 W. Adams St.
Chicago, IL 60661
United States

Franco Fiordelisi

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Iftekhar Hasan

Fordham University ( email )

45 COLUMBUS AVENUE
GBA-5TH FLOOR
NEW YORK, NY 10023
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

University of Sydney ( email )

P.O. Box H58
Sydney, NSW 2006
Australia

Woon Sau Leung (Contact Author)

The University of Edinburgh Business School, The University of Edinburgh ( email )

29 Buccleuch Pl
Edinburgh, Scotland EH8 9JS
United Kingdom

Gabriel Wong

Cardiff University - Cardiff Business School ( email )

Aberconway Building
Colum Drive
Cardiff, Wales CF10 3EU
United Kingdom

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