Finance Series

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

Series number:

726/2021

Date published:

Last revised:

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Categories

Agency
COVID-19
Performance

Keywords

corporate culture, COVID-19, Pandemic, demand, supply chain, Employees, Community, Digital Transformation, new product development, human capital, Machine Learning, topic modelling, correlated topic model
    This article was published in Journal of Financial and Quantitative Analysis, Volume 56, Number 7, pp. 2545–2583, on . Read the journal article here.

Abstract

After fitting a topic model to 40,927 COVID-19-related paragraphs in 3,581 earnings calls over the period January 22 to April 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.

© Kai Li, Xing Liu, Feng Mai, Tengfei Zhang, 2021
All rights reserved. Distributed for discussion purposes only; not to be reproduced without permission. The views expressed are those of the author(s) and do not necessarily reflect those of ECGI or its members. For copyright queries or takedown requests, contact wp@ecgi.org.

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