The effect of religious piety on managerial entrenchment: evidence from entrenched boards of directors

Pandej Chintrakarn, Shenghui Tong, Pornsit Jiraporn

Research output: Contribution to journalArticlepeer-review

Abstract

Prior research shows that religious piety is linked to honesty and risk-aversion. Religious piety alleviates the agency conflict by lessening the motivation for managers to exploit shareholders. Because of its role in mitigating the agency conflict, we argue that religious piety influences corporate governance arrangements. We exploit the variation in religious piety across U.S. counties and show that religious piety significantly influences the probability that a firm has an entrenched (staggered) board of directors. In particular, firms located in an area with stronger religious piety are significantly less likely to have a staggered board. This negative effect, however, is significant only when the degree of religiosity is higher than a certain threshold. Further analysis reveals that our results are unlikely confounded by endogeneity. Our results are especially interesting as they demonstrate that non-financial attributes, such as religious piety, has a significant influence on one of the most crucial governance mechanisms, i.e. the board of directors.

Original languageEnglish (US)
Pages (from-to)1417-1422
Number of pages6
JournalApplied Economics Letters
Volume24
Issue number19
DOIs
StatePublished - Nov 11 2017

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'The effect of religious piety on managerial entrenchment: evidence from entrenched boards of directors'. Together they form a unique fingerprint.

Cite this