The Role of Corporate Culture in Bad Times: Evidence from the COVID-19 Pandemic

The Role of Corporate Culture in Bad Times: Evidence from the COVID-19 Pandemic

Kai Li, Xing Liu, Feng Mai, Tengfei Zhang

Series number :

Serial Number: 
726/2021

Date posted :

January 25 2021

Last revised :

February 02 2021
SSRN Share

Keywords

  • corporate culture • 
  • COVID-19 • 
  • Coronavirus • 
  • SARS-CoV-2 • 
  • Pandemic • 
  • demand • 
  • supply chains • 
  • Employees • 
  • Community • 
  • Digital Transformation • 
  • new product development • 
  • human capital • 
  • stock market • 
  • Machine Learning • 
  • topic modeling • 
  • correlated topic model • 
  • Textual Analysis

After fitting a topic model to 40,927 COVID-19-related paragraphs in 3,581 earnings calls over the period January 22 to April 30, 2020, we obtain firm-level measures of exposure and response related to COVID-19 for 2,894 U.S. firms.

We show that despite the large negative impact of COVID-19 on their operations, firms with a strong corporate culture outperform their peers without a strong culture. Moreover, these firms are more likely to support their community, embrace digital transformation, and develop new products than those peers. We conclude that corporate culture is an intangible asset designed to meet unforeseen contingencies as they arise.

Authors

Real name:
Research Member
UBC Sauder School of Business
Real name:
Xing Liu
Real name:
Feng Mai
Real name:
Tengfei Zhang