Finance Faculty Publications and Presentations
Document Type
Article
Publication Date
11-6-2024
Abstract
Highlights
- We find that firms with stronger corporate culture encounter lower investment inefficiency.
- The association is more pronounced for financially unconstrained firms.
- We document that reducing information asymmetry or engaging in tax avoidance are two potential channels through which corporate culture reduces investment inefficiency
- We highlight the substitutability between corporate culture and local religiosity, as well as between corporate culture and CSR engagement in reducing investment inefficiency.
- Our findings support the importance of corporate culture for corporate decisions and outcomes, and hence, for adding value.
Abstract
Using an aggregate measure of corporate culture, we find that firms with stronger corporate culture encounter lower investment inefficiency. We show that reducing information asymmetry or engaging in tax avoidance are two potential channels through which corporate culture reduces investment inefficiency. Further analyses reveal that the aforementioned relationship is more pronounced for firms with lower local religiosity, firms with less corporate social responsibility engagement, and financially unconstrained firms. Overall, our findings contribute to the literature stressing the importance of corporate culture for corporate decisions and outcomes, and hence, for adding value.
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Publication Title
International Review of Financial Analysis
DOI
https://doi.org/10.1016/j.irfa.2024.103736
Recommended Citation
Hossain, M.N., Rabarison, M.K. and Guo, C. (2024) ‘Corporate culture and investment inefficiency’, International Review of Financial Analysis, p. 103736. Available at: https://doi.org/10.1016/j.irfa.2024.103736
Comments
Original published version available at https://doi.org/10.1016/j.irfa.2024.103736