The Role of Corporate Culture in Bad Times: Evidence from the COVID-19 Pandemic

2021/06/14 by Kai Li, Xing Liu, Feng Mai +1 · 2 citations
Economics, Econometrics and Finance · Business, Management and Accounting · Decision Sciences · #COVID-19 Pandemic Impacts #Auditing, Earnings Management, Governance #Impact of AI and Big Data on Business and Society

paper · doi:10.1017/s0022109021000326

Abstract

Abstract After fitting a topic model to 40,927 COVID-19–related paragraphs in 3,581 earnings calls over the period Jan. 22–Apr. 30, 2020, we obtain firm-level measures of exposure and response related to COVID-19 for 2,894 U.S. firms. We show that despite the large negative impact of COVID-19 on their operations, firms with a strong corporate culture outperform their peers without a strong culture. Moreover, these firms are more likely to support their community, embrace digital transformation, and develop new products than those peers. We conclude that corporate culture is an intangible asset designed to meet unforeseen contingencies as they arise.

Citations

• On Persistence in Mutual Fund Performance
• Probabilistic topic models
• Evidence on the Characteristics of Cross Sectional Variation in Stock Returns

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