Corporate culture and firm resilience in China: Evidence from the Sino-US trade war

Sirui Cheng, Xiuping Hua and Qingfeng Wang

Pacific-Basin Finance Journal, 2023, vol. 79, issue C

Abstract: Prior literature shows that corporate culture matters for firm performance and enhance corporate resilience in crises. We construct a text-based measure of corporate culture for Chinese listed firms and study whether and how strong corporate culture improves corporate resilience during the Sino-US trade war. Empirical analyses suggest that a strong corporate culture mitigates the deteriorating stock returns due to the trade war exposure through two potential influencing mechanisms, enhancing operating performance and mitigating financial constraint. Results also indicate that strong culture works more effectively for privately owned enterprises (POEs) than their state-owned peers, and individual cultures of innovation, hardworking, teamwork, and quality have material effects on stock performance of the POEs. The evidence pinpoints that strong corporate culture helps insulate Chinese private firms more from external shocks and achieve a more sustainable growth.

Keywords: Corporate culture; Textual analysis; Machine learning; Trade war; Operating performance (search for similar items in EconPapers)
JEL-codes: F51 G32 G34 Z13 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:79:y:2023:i:c:s0927538x23001051

DOI: 10.1016/j.pacfin.2023.102039

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