Does Religion Matter in Corporate Decision Making in America?

We examine how corporate culture influences firm behavior. Prior research suggests a link between individual religiosity and risk aversion. We find that this relationship also influences organizational behavior. Firms located in counties with higher levels of religiosity display lower degrees of risk exposure, as measured by variances in equity returns or returns on assets. They exhibit a lower investment rate and less growth, but generate a more positive market reaction, when they announce new investments. Finally, chief executive officers are more likely to join a firm with a similar religious environment as in their previous firm when they switch employers.