Social, Biological and Cultural Foundations of Corporate and Investor Behaviors.

Abstract

Abstract chapter 1: I investigate the effect of religiosity on the organizational capital of firms. By examining the county-level religious adherence rates in the US, I find that firms located in counties with higher religiosity demonstrate increased organizational capital. After accounting for firm-specific product market competition and productivity, my analysis reveals that religiosity, acting as social norms conducive to human capital development, prompts firms to increase their investment in organizational capital. To address potential endogeneity issues, I apply different fixed effects and also follow Kumar et al. (2011) and lag the religiosity variable by three years as an instrument for the concurrent value. My results, further, highlight that the counties with both Protestants and Catholics significantly invest into organizational capital. The findings underscore the macroeconomic benefits of religiosity, particularly its role in promoting human capital development within the context of corporate finance. Abstract chapter 2: I examine the role of social capital in mitigating firm-specific political and regulatory uncertainty among the firms in the US. My findings show that social capital can improve the allocation of resources through mitigating the adverse effects of overall and political uncertainty. To address the potential endogeneity issues, I follow Pasiouras and Samet (2022) and employ a two-stage least squares regression. Specifically, I use the prevalence of infectious diseases at the county level as an instrument for social capital to validate the baseline regression results. Additional robustness tests indicate that firms in counties with high social capital effectively implement asset reallocation strategies and enhance operational efficiency. Moreover, social capital strengthens the positive effects of productivity shocks despite the firms’ exposure to numerous regulations. These findings underscore the significant and positive role of social capital in mitigating political and regulatory challenges and enabling firms to achieve an efficient allocation of resources. (...) (Abstract chapter 3 and 4 in full-text version available at the BI library)

Social, Biological and Cultural Foundations of Corporate and Investor Behaviors.