SELECTED DETERMINANTS SHAPING CORPORATE CULTURE

Uncertainty Determinants of Corporate

This paper investigates the link between the optimal level of non-financial firms’ liquid assets and uncertainty. We develop a partial equilibrium model of precautionary demand for liquid assets showing that firms alter their liquidity ratio in response to changes in either macroeconomic or idiosyncratic uncertainty. We test this hypothesis using a panel of non-financial US firms drawn from the...

Determinants of Corporate Borrowing

Corporate Risk Culture∗

We examine the formation and evolution of corporate risk culture, defined as the preferences towards risk and uncertainty shared by a firm’s leaders, as well as its effect on corporate policies. Commonality in risk attitudes inside the firm arises through the selection of managers and directors with similar attitudes towards risk and uncertainty. Selection also leads to persistence in corporate...

Corporate Culture, Societal Culture, and Institutions

While both cultural and legal norms (institutions) help foster cooperation, culture is the more primitive of the two and itself sustains formal institutions. Cultural changes are rarer and slower than changes in legal institutions, which makes it difficult to identify the role played by culture. Cultural changes and their effects are easier to identify in simpler, more controlled, environments,...

Uncertainty Determinants of Corporate Liquidity

This paper investigates the link between the optimal level of non–financial firms’ liquid assets and uncertainty. We develop a partial equilibrium model of precautionary demand for cash that shows that firms are likely to change their liquidity ratio in response to changes in uncertainty. We test this proposition using a panel of non–financial US firms drawn from COMPUSTAT quarterly database co...