Local Religiosity Research Articles

Corporate culture and investment inefficiency

Using an aggregate measure of corporate culture, we find that firms with stronger corporate culture encounter lower investment inefficiency. We show that reducing information asymmetry or engaging in tax avoidance are two potential channels through which corporate culture reduces investment inefficiency. Further analyses reveal that the aforementioned relationship is more pronounced for firms with lower local religiosity, firms with less corporate social responsibility engagement, and financially unconstrained firms. Overall, our findings contribute to the literature stressing the importance of corporate culture for corporate decisions and outcomes, and hence, for adding value.

Religion and branch banking

This study aims to examine whether religion influences branch banking. Using a large sample of U.S. county-level branch banking and religious characteristics data between 1994 and 2018, we find that the local religiosity of the bank headquarters’ region is positively related to the presence of bank branches. By contrast, banks in regions with more Catholics than Protestants are less likely to have branches. Moreover, religious diversity negatively affects branch banking. Overall, our study highlights the significant role of local religions in branch-banking decisions.

Local religiosity and financial advisor misconduct

We find that local religious social norms mitigate professional misconduct by financial advisors. Using publicly disclosed misconduct data, we find that financial advisors working in areas with greater religious participation are less likely to violate ethical standards. When advisors move to counties with greater religious participation, their misconduct rates decrease. The effect of local religiosity is robust across population density levels, misconduct types, and market conditions. We strengthen identification by using shocks to religious participation following local disclosures of sexual abuse by Catholic priests. The findings show that local religiosity restrains misconduct not only in previously studied corporate financial settings but also when professionals provide financial services to individuals and households.

Religion and persecution

AbstractThis paper investigates the relationship between local religiosity and episodes of persecutions in Europe between 1100 and 1850. We introduce a novel proxy for measuring local religion: the cult of saints in early Western Christianity. Our findings show that cities with an established cult of a saint are 11% points more likely to engage in Jewish persecutions and witch trials. However, cities with more progressive gender norms, measured by the presence of a female saint cult, are less likely to persecute witches compared to male-only saint cities. Our baseline relationship persists after controlling for a range of city-level economic, geographic and institutional characteristics and after accounting for other major confounders. Suggestive evidence points towards two mechanisms behind the saints-persecution relationship: (i) changes in norms induced by longer exposure to Christianity; and (ii) proximity of religious groups due to congruence of religious festivities.

Religiosity and bank lending: evidence surrounding the pandemic in the USA

Purpose The purpose of this study is to investigate the impact of religiosity on banks’ lending behavior during the COVID-19 pandemic in the USA. Design/methodology/approach This study uses the evidence from the issuance of Paycheck Protection Program (PPP) loans to relate local religiosity to banks’ participation in the PPP loan program and to banks’ loan portfolio performance during the pandemic. Findings The results of this study show that banks located in more religious counties have a higher level of lending through the PPP, supporting the ethical and moral concerns cultivated by local religious beliefs. In addition, banks’ lending before the pandemic is more prudential in more religious areas, as reflected in lower losses and higher returns at the onset of the crisis, especially in areas where business activities were most disrupted, supporting the stewardship role encouraged by religiosity. Originality/value Thanks to the structure of the PPP loans programs, the authors are able to disentangle the conflicting effects of morality and prudence on banks’ behavior.

Does Religion Affect Mortgage Delinquency?

We provide evidence that religiosity deters mortgage delinquency. Religiosity is the percentage of the total county population who adheres to a religion. The results show that locations with a higher level of religiosity have a significantly lower mortgage delinquency rate after controlling for income, employment, education, population, etc. A one-standard-deviation increase in religiosity in a county leads to almost a 0.096 standard-deviation decrease in the mortgage delinquency rate, which corresponds to nearly 9.1% (12.3%) of the sample average (median) mortgage delinquency rate. The impact of religiosity increases during and after the global financial crisis period. Previous studies in the literature indicate that religiosity is related to a preference to save, higher aversion to risk as well as moral values towards mortgage default, all of which are linked to mortgage default decisions. This new evidence suggests the role of local religiosity in evaluating and modeling mortgage default risk.

Victory on Earth or in Heaven: Mexico's Religionero Rebellion

Victory on Earth or in Heaven: Mexico's Religionero Rebellion

Local Religiosity and Stock Liquidity

Local Religiosity and Stock Liquidity

Bailes y danzas en la época colonial. Dinámicas mestizas en la ciudad de Jujuy, siglos XVII-XVIII

This paper presents the identification of dances configured during the American reality of the colonial period in a city located between the Viceroyalty of Peru and the Viceroyalty of the Rio de la Plata, in the context of the 17th and 18th centuries, but with pre-Hispanic and modern projections in order to outline performances on which there are scarce records, and with comparative references to a wider space related to the case study: the Rio de la Plata, the Andean world and the border with the Chaco. In particular, the researcher proposes the hypothesis that dances were stabilizing poles for the conflictive and complex mimesis with the background of coexistence, articulated the diverse American societies of Europeans, Indians and Afro-Americans, based on mestizo dynamics which combined the dances with food and drink, sensuality, power and authority and local religiosity. The research was carried out from a cultural history perspective, working with original documentation generated by the state, the church and judicial records of individuals. However, due to the concise historical data, archaeological interpretations of pre-and post-Hispanic societies, as well as ethnographic surveys of the Andean and Chaco region were considered in this case study.

Local religiosity, workplace safety, and firm value

This paper examines the effect of local religiosity on employee treatment, proxied by workplace safety incidents. Using the establishment-level data compiling on the incidents of work-related injuries, we find that employees of the establishments in more religious counties get less injured than those in less religious counties. We further find that a reduction in occupational accidents is more evident for establishments in counties dominated by one religious denomination, strengthening our argument on community solidarity and homophily stemming from religious networks. Firms whose establishments are located in high religiosity counties are less likely to violate workplace conduct and more likely to take workplace safety measures. Moreover, firms with more work-related injuries exhibit poorer firm performance. Overall, our findings suggest that local religiosity has a value implication through human capital protection.

The Effects of Managerial Competency and Local Religiosity on Corporate Environmental Responsibility

This study investigates the influence of local religious beliefs to evaluate managerial motives towards corporate environmental engagement, considering the growing attention of the role of external factors in shaping corporate behavior. Using Newsweek’s green rankings of the largest publicly traded US firms by market capitalization from 2014–2016, we find that competent managers show a higher strategic preference for corporate environmental practices in firms located in low-Protestant or high-Catholic areas exhibiting higher risk and uncertainty, which tend to mitigate the negative effects of risky environments. We find that corporate environmental practices positively influence the sales of firms in high risk-taking states. This study provides significant contributions to the literature documenting the consequences of local religious risk-taking behavior and elaborates on the perceptions of competent managers on environmental management. The results provide valuable insights for practitioners and policymakers looking to incorporate environmental practices.

Religion and Persecution

This paper investigates the relationship between local religiosity and episodes of persecutions in a sample of over 2,100 European cities during 1100-1850. We introduce a novel proxy for measuring local religion: the cult of saints in early Western Christianity. Our findings show that cities with an established cult of a saint are associated with a 16 and 10 percentage points (pp) increase in the likelihood of witch trials and witch killings and an 11 pp increased likelihood of Jewish persecutions. However, cities with more progressive gender norms, measured by the presence of a female saint cult, are less likely to persecute witches compared to male-only saint cities. Our baseline relationship persists after controlling for a range of city-level economic, geographic and institutional characteristics and after accounting for other major confounders. We find two plausible mechanisms behind the saints-persecution relationship: (i) changes in norms induced by longer exposure to Christianity; and (ii) proximity of religious groups due to congruence of religious festivities.

The Effect of Local Religiosity on Financing Cross-Regional Entrepreneurial Projects Via Crowdfunding (Local Religiosity and Crowdfinancing)

This paper aims to develop a better understanding of the influence of the social environment in which entrepreneurs reside on the success of the crowdfunding projects they propose. Specifically, this study investigates on the importance of local religiosity on the propensity to support cross-regional crowdfunding projects. We theoretically discuss and empirically document, using a dataset of 5841 contributions on three Swiss reward-based and donation-based platforms, that local religiosity affects cross-regional resource flows by creating social interactions and enhancing trust. Furthermore, we find that cross-regional resource flows are more likely between regions sharing the same primary religion—whether Protestant or Catholic.

Does Religiosity Improve Analyst Forecast Accuracy?

This paper studies the impact of local religiosity on analyst forecast accuracy. Using the level of religious adherence as a proxy for religiosity in firm headquarter states, we find that analyst forecasts are more accurate for firms located in areas with stronger religious social norms. Our finding is robust to the inclusion of analyst and regional characteristics, firm, industry, and state fixed effects, controlling for earnings quality and audit quality, 2SLS-instrumental variable estimation, propensity score matching analysis, and a difference-in-difference test using firm headquarter relocations as a quasi-natural experiment. We further document a novel finding that religiosity has an “accentuating effect” on analyst forecast accuracy: religion can make a good thing better. Specifically, we find that local religiosity has a more pronounced positive effect on firms issuing management guidance or having fewer agency problems. Finally, we find that analyst forecast revisions for firms in more religious areas have higher information content. Overall, our study shows that religiosity enhances the accuracy and information content of analyst forecasts.

RELIGIOSITY, SHAREHOLDER LAWSUITS, AND EMPLOYEE WHISTLEBLOWING

We investigate how the level of religiosity in the county in which a firm is headquartered affects the incidence of shareholder lawsuits and employee whistleblowing. We hypothesize that the local religiosity promotes an environment in which employees are prone to be more truthful, less expedient and more prone to whistleblowing if their managers make untruthful disclosures and/or unethical decisions. Consequently, firm shareholders are more likely to trust managers by giving them the benefit of the doubt, which mitigates the prospective elements of the harmful deed and fraudulent intent associated with shareholder lawsuits. We find monetary incentives to be positively related to employee whistleblowing, but this effect disappears in religious firms. The effect of religiosity on lawsuits and whistleblowing is more pronounced. With weaker external monitoring. Collectively, these results are consistent with religiosity inducing a corporate environment with enhanced whistleblowing and ethical managerial decisions, leading to fewer outside shareholder lawsuits. Pray for us, for we are sure that we have a clear conscience, desiring to act honorably in all things. —Hebrew 13:18, Christian New Testament I’ve got a very deep faith, and I was led every step of the way. —Citigroup whistleblower Professor Richard Bowen Half

Sin sectors and negative screening

AbstractIn this research, I analyse how exposure to sin sectors impacts the financial performance of socially responsible (SR) funds. I also analyse the question of whether or not these funds keep their word and are less exposed to the controversial sectors that they claim to exclude in their prospectuses. Additionally, I analyse how local political and religious factors exert an influence on the exposure of SR funds to sin sectors. Consequently, I analyse a sample comprising 136 SR mutual funds that were domiciled in the U.S. market in the period March 2017–April 2020 and who invest in domestic and global equity, of which 92 implement negative screens on at least 1 of 12 controversial activities. My results show that for seven (three) of the controversial sectors that were analysed, the exposure of SR funds to these sectors jeopardises (improves) their financial performance. Furthermore, SR mutual funds who perform negative screens tend to live up to their name and are less exposed to the sector/s that they claim to exclude. In addition, SR mutual funds managed by companies located in Democrat‐leaning states are less exposed to sin sectors, and that the effect of local religiosity depends on the specific sector analysed.

Voicing Souls: Embodying Uncertainty in a Portuguese Borderland Village

Focusing on the ritual of the Commending of the Souls in Penha Garcia (Portugal), this article analyzes how its recasting as heritage is re-inventing a declining rurality and aiding an uncertain future. A renewed vernacular engagement with the ritual, along with the local use of heritage policy to render it intangible heritage is 1) generating a vernacularization of Portuguese Catholicism (analogous to “religious pluralization”), and 2) construing heritage-making as an efficacious technique of religious belief. This article argues that the collective engagement of local actors in the processes of vernacularization and transforming of this ritual into heritage is (re-)enchanting the virtuosity of their local religiosity, which embodies and suspends a structural uncertainty.

Local Religiosity and Insider Trading Activity

Based on the organizational psychology and social norms theories, we provide empirical evidence on the effect of local religiosity on insider trading activity. We find that local religiosity has a negative and statistically significant impact on insider trading activity, which is robust to alternative model specifications, selection bias, reverse causality, omitted variable bias, and measurement errors. Local religiosity negatively affects both insider purchase and sale activity, supporting the predictions of the morality and risk-aversion traits of local religiosity. However, the effect of the risk-aversion trait dominates the morality trait since the negative effect of local religiosity on insider sale transactions is higher. We also show that the level of information asymmetry, a key driver of insider trading activity, magnifies the effect of local religiosity on insider trading activity. Overall, local religiosity works as a compensatory control mechanism moderating the effect of managerial rent extraction motives on insider trading activity.

A Goddess and a Pañcāyat President: Narrative, Sanctity, and Authority in Rural Tamil Nadu

In an examination of the interdependent relationship between narrative and ritual, this article discusses a ritual dilemma solved through narrative to explore how narrative sustains authority usually enacted, validated, and supported by ritual practice. In the Tamil village of Nagamalai Pudukkottai, Jeyakumar, the pancāyat president, must perform as a cāmiyāti (“god dancer”) possessed by the village’s most powerful form of divinity, Taṭātakai Ammaṉ, to substantiate his family’s long lineage of traditional authority. For seventeen years, however, Jeyakumar was unable to substantiate his authoritative claim through ritual; instead, he and his constituents relied on narratives, including a migration myth. Narrative did not replace the importance of ritual in Nagamalai Pudukkottai, but rather, the usually obligatory tie to the goddess was deferred and his legitimacy was maintained through narrative. Village claims to authority depend upon negotiating the connections among the village migration myth, the local goddess temple myth, personal experience narratives, and everyday conversational narratives and stories. Each of these narrative genres claims authority differently but works as part of an interdependent folklore system to confirm the village’s sacrality and leadership. Jeyakumar’s authority is further strengthened by local folk mythologies that integrate nearby Madurai’s more formalized Mīnākṣī tradition into local religiosity surrounding Taṭātakai Ammaṉ.

Religiosity and loss aversion: Does local religiosity influence the skewness of stock returns?

AbstractTraditional asset pricing theory rests on the assumption that stock returns are normally distributed. However, research shows that instead of being normally distributed, stock returns are often positively skewed. In this study, we attempt to explain this phenomenon by taking a unique approach. In particular, we test the hypothesis that religiosity can influence the normality of the return distribution. Our tests are motivated by the idea that religion is an integral part of the culture within a society that influences managerial decision‐making. Local religiosity (or lack thereof) can shape the values, beliefs and decisions of managers including those related to the types of investments that are attractive. We hypothesize that in more religious cultures, individuals will be more loss averse since religion may be used as an attempt to avoid very unfavorable outcomes (Hell). Managers in these religious cultures, therefore, may be attracted to capital investment projects that avoid tail risk, which may help explain the positive skewness of the return distribution of stocks. Empirical results seem to confirm our hypothesis.