Working Paper: CEPR ID: DP9716
Authors: Luigi Guiso; Paola Sapienza; Luigi Zingales
Abstract: We study which dimensions of corporate culture are related to a firm?s performance and why. We find that proclaimed values appear irrelevant. Yet, when employees perceive top managers as trustworthy and ethical, firm?s performance is stronger. We then study how different governance structures impact the ability to sustain integrity as a corporate value. We find that publicly traded firms are less able to sustain it. Traditional measures of corporate governance do not seem to have much of an impact.
Keywords: corporate culture; going public; integrity
JEL Codes: G30; Z1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high levels of perceived integrity (D73) | firm outcomes (productivity and profitability) (L21) |
| integrity serves as a valuable asset (M14) | enhancing performance metrics (L25) |
| publicly traded firms (G34) | lower integrity (L15) |
| focus on shareholder value maximization (G34) | detract from emphasis on integrity (Z13) |
| venture capital-backed firms (G24) | no decline in integrity when going public (G38) |