Corporate Culture

54 Pages Posted: 7 Oct 2021 Last revised: 4 Jun 2022

See all articles by Gary B. Gorton

Gary B. Gorton

Yale School of Management; National Bureau of Economic Research (NBER); Yale University - Yale Program on Financial Stability

Jillian Grennan

Santa Clara University, Leavey School of Business; Santa Clara University School of Law; University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Alexander Zentefis

Yale School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: October 2021

Abstract

Corporate culture is an omnibus term that includes many elements like norms, values, knowledge, and customs that are relevant to a firm. Economists have made great progress recently in devising methods of measuring different aspects of corporate culture. These empirical measures of culture have explained mergers and acquisitions, corporate risk-taking, and unethical behaviors observed in corporations, among other topics. We argue that unpacking corporate culture into its components is the right way to research it empirically. Theories of corporate culture are still in development, and we discuss the major contributions thus far. We argue that a theory of the firm and of corporate decision-making that is based on corporate culture is more germane to the practical realities of firms’ inner workings than prevailing theories based on agency costs. Corporate culture has the potential to set the theoretical paradigm for all corporate finance research.

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Suggested Citation

Gorton, Gary B. and Grennan, Jillian and Zentefis, Alexander, Corporate Culture (October 2021). NBER Working Paper No. w29322, Available at SSRN: https://ssrn.com/abstract=3935510

Gary B. Gorton (Contact Author)

Yale School of Management ( email )

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HOME PAGE: http://mba.yale.edu/faculty/profiles/gorton.shtml

National Bureau of Economic Research (NBER)

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Yale University - Yale Program on Financial Stability

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Jillian Grennan

Santa Clara University, Leavey School of Business ( email )

Santa Clara, CA 95053
United States

Santa Clara University School of Law ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Berkeley, CA 94720
United States

Alexander Zentefis

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

HOME PAGE: http://som.yale.edu/alexander-zentefis

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