Do financial markets value corporate culture?

Thanh Tran, Harvey Nguyen and Mia Hang Pham

International Review of Financial Analysis, 2025, vol. 98, issue C

Abstract: This paper examines how financial market participants incorporate corporate culture, an important value-relevant information, into their investment decisions. Utilizing firm-level corporate culture measures derived from the earnings conference call transcripts, we find that firms with stronger cultural values are associated with higher stock liquidity. We identify three channels through which corporate culture affects stock liquidity: reducing information risk, enhancing trust, and increasing investor recognition. In addition, we find that stronger corporate culture is significantly associated with higher stock price informativeness and future stock returns, and lower level of default risk and informed trading. Overall, our findings highlight the importance of corporate culture in enhancing financial market quality.

Keywords: Corporate culture; Market liquidity; Information risk; Investor recognition (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:98:y:2025:i:c:s1057521924007555

DOI: 10.1016/j.irfa.2024.103823

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