Trust and Contracting: Evidence from Church Sex Scandals

Gilles Hilary and Sterling Huang ()
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Sterling Huang: Singapore Management University

Journal of Business Ethics, 2023, vol. 182, issue 2, No 7, 442 pages

Abstract: Abstract Firms located in communities in which people are, on average, more trusting enjoy some benefits in terms of the power of CEO contracts. We present two pieces of empirical evidence to support this claim: (1) higher average trust in a county is associated with “flatter” executive contracts and (2) when an exogenous shock occurs (such as a scandal involving an important social institution), both trust and contracting move in similar directions. We obtain the first result in a panel specification and the second in a “difference-in-difference” specification that uses the revelation of sex scandals involving the Catholic Church across different U.S. localities.

Keywords: Church scandals; Community trust; Firm management (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10551-021-04996-w

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