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In the radiance of enlightenment: The influence of nontheistic religions on corporate default risk

Author

Listed:
  • Feng, Yuruo
  • Hao, Wei
  • Fang, Jiali
  • Wongchoti, Udomsak

Abstract

We investigate whether religious site density around a firm's headquarters is related to corporate default risk in China. We find that public firms surrounded by a higher number of Buddhist and Taoist temples are associated with lower default risk. In contrast to the widely documented impact of Western religiosity on corporate behavior, our mechanism tests indicate that lower default risk related to religious site density is primarily driven by better corporate governance and not by a surge in corporate conservatism. Finally, we find that this default risk lowering effect is more pronounced when firms also possess greater political resources.

Suggested Citation

  • Feng, Yuruo & Hao, Wei & Fang, Jiali & Wongchoti, Udomsak, 2024. "In the radiance of enlightenment: The influence of nontheistic religions on corporate default risk," Emerging Markets Review, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:ememar:v:60:y:2024:i:c:s1566014124000232
    DOI: 10.1016/j.ememar.2024.101128
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    More about this item

    Keywords

    Religion; Default risk; Chinese market; Buddhism; Taoism; Political intervention; Corporate governance; Conservatism; Managerial early life experience; Altman's Z-score;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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