Corporate Culture

Gary Gorton, Jillian Grennan and Alexander K. Zentefis

No 29322, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Corporate culture is an omnibus term that includes many elements like norms, values, knowledge, and customs that are relevant to a firm. Economists have made great progress recently in devising methods of measuring different aspects of corporate culture. These empirical measures of culture have explained mergers and acquisitions, corporate risk-taking, and unethical behaviors observed in corporations, among other topics. We argue that unpacking corporate culture into its components is the right way to research it empirically. Theories of corporate culture are still in development, and we discuss the major contributions thus far. We argue that a theory of the firm and of corporate decision-making that is based on corporate culture is more germane to the practical realities of firms’ inner workings than prevailing theories based on agency costs. Corporate culture has the potential to set the theoretical paradigm for all corporate finance research.

JEL-codes: D23 G30 L22 M14 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-hpe, nep-hrm and nep-ore
Note: CF IO
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Citations: View citations in EconPapers (9)

Published as Gary B. Gorton & Jillian Grennan & Alexander K. Zentefis, 2022. "Corporate Culture," Annual Review of Financial Economics, vol 14(1).

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