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Does Religion Shape Corporate Cost Behavior?

Journal of business ethics, 2021-05, Vol.170 (4), p.835-855 [Peer Reviewed Journal]

Springer Nature B.V. 2019 ;Springer Nature B.V. 2019. ;ISSN: 0167-4544 ;EISSN: 1573-0697 ;DOI: 10.1007/s10551-019-04377-4

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  • Title:
    Does Religion Shape Corporate Cost Behavior?
  • Author: Ma, Lijun ; Wang, Xin ; Zhang, Che
  • Subjects: Bias ; Business and Management ; Business Ethics ; Costs ; Education ; Ethics ; Job performance ; Management ; Optimism ; Original Paper ; Philosophy ; Quality of Life Research ; Religion ; Resource allocation ; Robustness
  • Is Part Of: Journal of business ethics, 2021-05, Vol.170 (4), p.835-855
  • Description: Using U.S. listed firms during the period from 1971 to 2010, this paper investigates the effect of religion on corporate cost behavior. We find that religion mitigates cost stickiness induced by agency or behavioral biases of managers. This result holds for several robustness tests that address endogeneity concerns. The mitigating effect of religion on cost stickiness is through the channel of reducing top managers’ overconfidence and optimistic bias regarding future demand change ( risk - aversion mechanism ) and promoting managers’ adherence to fiduciary responsibilities and consideration of shareholder benefits ( ethic mechanism ). Further evidence shows that the reduction in cost stickiness caused by religion increases firm value. Overall, our findings suggest that religion reduces the wedge between a firm’s actual and optimal resource commitments, which helps to improve firm value and resource allocation efficiency.
  • Publisher: Dordrecht: Springer Netherlands
  • Language: English
  • Identifier: ISSN: 0167-4544
    EISSN: 1573-0697
    DOI: 10.1007/s10551-019-04377-4
  • Source: ProQuest One Psychology
    ProQuest Central
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