The Role of Corporate Culture in Bad Times: Evidence from the COVID-19 Pandemic
Journal of Financial and Quantitative Analysis, Forthcoming
89 Pages Posted: 24 Jun 2020 Last revised: 28 Aug 2021
Date Written: July 22, 2021
After fitting a topic model to 40,927 COVID-19-related paragraphs in 3,581 earnings calls over the period January 22 to April 30, 2020, we obtain firm-level measures of exposure and response related to COVID-19 for 2,894 U.S. firms. We show that despite the large negative impact of COVID-19 on their operations, firms with a strong corporate culture outperform their peers without a strong culture. Moreover, these firms are more likely to support their community, embrace digital transformation, and develop new products than those peers. We conclude that corporate culture is an intangible asset designed to meet unforeseen contingencies as they arise.
Keywords: corporate culture; COVID-19; pandemic; demand; supply chain; employees; community; digital transformation; new product development; human capital; machine learning; topic modelling; correlated topic model
JEL Classification: M14, I18, J24, J28
Suggested Citation: Suggested Citation