Publication Type

Journal Article

Version

publishedVersion

Publication Date

1-2023

Abstract

Firms located in communities in which people are, on average, more trusting enjoy some benefits in terms of the power of CEO contracts. We present two pieces of empirical evidence to support this claim: (1) higher average trust in a county is associated with “flatter” executive contracts and (2) when an exogenous shock occurs (such as a scandal involving an important social institution), both trust and contracting move in similar directions. We obtain the first result in a panel specification and the second in a “difference-in-difference” specification that uses the revelation of sex scandals involving the Catholic Church across different U.S. localities.

Keywords

Church scandals, Community trust, Firm management

Discipline

Accounting | Business Law, Public Responsibility, and Ethics | Corporate Finance

Research Areas

Corporate Governance, Auditing and Risk Management

Publication

Journal of Business Ethics

Volume

82

Issue

2

First Page

421

Last Page

442

ISSN

0167-4544

Identifier

10.1007/s10551-021-04996-w

Publisher

Springer Verlag (Germany)

Copyright Owner and License

Publisher

Additional URL

https://doi.org/10.1007/s10551-021-04996-w

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