No. 3: Religion and Ownership


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.

Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, WHU – Otto Beisheim School of Management, European School of Management and Technology in Berlin and Goethe University Frankfurt who share the same research agenda.