No. 3: Religion and Ownership

Abstract

This study examines the effect of religion on ownership structures. In particular, we expect that the local strength of Protestantism will reduce ownership concentration and insider ownership. Protestantism is less hierarchical than Catholicism, which suggests that adherents of the Protestant faith will have a strong preference for autonomy. Moreover, they rely strongly on horizontal ties between fellow citizens, which encourages trust and reduces a shareholders’ need to monitor a firms’ employees. Our identification is based on a panel regression, a geographical regression discontinuity design, a difference design, and an instrumental variable approach. In line with our predictions, we find that the local strength of Protestantism reduces ownership concentration and insider ownership. A subsequent channel analysis suggests that the local strength of Protestantism has a negative direct effect on blockholder ownership and a negative indirect effect on the size of shareholding and insider ownership through developing trust. Overall, our results underline the role of the demographic features of firms’ geographic environments in explaining ownership structures.

Beteiligte Institutionen

Die Hauptstandorte vom TRR 266 sind die Universität Paderborn (Sprecherhochschule), die HU Berlin und die Universität Mannheim. Alle drei Standorte sind seit vielen Jahren Zentren für Rechnungswesen- und Steuerforschung. Hinzu kommen Wissenschaftler der LMU München, der Frankfurt School of Finance and Management, der WHU – Otto Beisheim School of Management, der European School of Management and Technology in Berlin und der Goethe-Universität Frankfurt, die die gleiche Forschungsagenda verfolgen.