Faculty of Economics and Business Administration Publications Database

Corporate culture and banking

Barth, Andreas
Mansouri, Sasan
Volume: 186
Pages: 46 - 75
Month: 06
ISSN-Print: 0167-2681
Link External Source: Online Version
Year: 2021
Keywords: Corporate culture; Competing Value Framework; CEO Compensation; Stock returns; Bankruptcy risk

This paper empirically analyzes the role of corporate culture in banking. We define culture based on the Competing Value Framework (Quinn and Rohrbaugh, 1983) and find that banks with a more pronounced competition-oriented culture have stronger bonus-focused compensation schemes. Banks with a strong focus on growth show higher stock returns and banks with a focus on stability show lower bankruptcy risk. These findings support various theories on bank culture (Thakor, 2012; Song and Thakor, 2019) and highlight the importance of corporate culture as a ‘softer’ aspects of governance to enhance banking stability.