Publication: The effect of religious piety on managerial entrenchment: evidence from entrenched boards of directors
Issued Date
2017-11-11
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ISSN
14664291
13504851
13504851
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2-s2.0-85010651028
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Mahidol University
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SCOPUS
Bibliographic Citation
Applied Economics Letters. Vol.24, No.19 (2017), 1417-1422
Suggested Citation
Pandej Chintrakarn, Shenghui Tong, Pornsit Jiraporn The effect of religious piety on managerial entrenchment: evidence from entrenched boards of directors. Applied Economics Letters. Vol.24, No.19 (2017), 1417-1422. doi:10.1080/13504851.2017.1282136 Retrieved from: https://repository.li.mahidol.ac.th/handle/20.500.14594/42502
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Title
The effect of religious piety on managerial entrenchment: evidence from entrenched boards of directors
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Abstract
© 2017 Informa UK Limited, trading as Taylor & Francis Group. Prior research shows that religious piety is linked to honesty and risk-aversion. Religious piety alleviates the agency conflict by lessening the motivation for managers to exploit shareholders. Because of its role in mitigating the agency conflict, we argue that religious piety influences corporate governance arrangements. We exploit the variation in religious piety across U.S. counties and show that religious piety significantly influences the probability that a firm has an entrenched (staggered) board of directors. In particular, firms located in an area with stronger religious piety are significantly less likely to have a staggered board. This negative effect, however, is significant only when the degree of religiosity is higher than a certain threshold. Further analysis reveals that our results are unlikely confounded by endogeneity. Our results are especially interesting as they demonstrate that non-financial attributes, such as religious piety, has a significant influence on one of the most crucial governance mechanisms, i.e. the board of directors.