Publication detail

Religion, Corporate Governance, and Executive Compensation

Author(s): Mgr. Aleš Čornanič , Šarapatka, Jan
Jiří Novák M.Sc., Ph.D., Deloitte Corporate Chair, Šarapatka, Jan
Type: Articles in journals with impact factor
Year: 2018
Number: 81
ISSN / ISBN: 0015-1920
Published in: Czech Journal of Economics and Finance
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Abstract: We investigate how regional variation in religiosity and the prevalent religious denomination in a U.S. state where a company is headquartered are associated with the level and structure of executive compensation. We document a substantial compensation premium in executives working at firms headquartered in U.S. states with a high proportion of Catholics and conversely a discount in states with a high proportion of Protestants. We provide evidence suggesting that these findings are not caused by heterogeneous demand for executives’ effort, managerial ability, or social skills. Our results are consistent with the “Catholic premium” and the “Protestant discount” being associated with the adherence to different social values that have implications for corporate governance quality and for managerial entrenchment. Our results highlight the importance of social values for economic activity and for contracting between economic agents.
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