Capital structure and religion. Some international evidence

Abstract

In the recent years, an increasing number of papers deepened cross-disciplinary studies, examining how different cultural values influence financial variables. The main objective of our paper is to test if the dominant world religions (Buddhist, Christian, Hindu, Islamic, and Judaic), and, moreover, some Christian denominations (Catholicism, Protestantism and Eastern Orthodox Christianity) are related to some patterns in capital structure. Our paper considers distinctly the category of countries in which Agnostics, Atheists and non-religious people are predominant. The results are promising. Companies located in the states with predominance of Islamic religion have a lower leverage, while the ones from predominantly Catholic, Eastern Orthodox, Hindu and Judaic countries, as well as those in mainly Agnostic, Atheist and non-religious ones, are indebted more than those from mainly Protestant countries. The debt maturity seems to be correlated to the dominant religions or denominations, with companies in the predominantly Eastern Orthodox, Buddhist and Agnostic, Atheist and non-religious countries relying more on short term debt, and those in the majority Catholic, Judaic and Hindu countries on long term debt.

Hidden religious aspects of job satisfaction and work attitudes: The differences between Eastern and Western Europe

“…The effect of income on job satisfaction, meanwhile, has been widely researched without any clear consensus. The effect may differ when we consider objective or subjective income level , or the absolute level of income or its growth (Dragot a et al 2018). As addressed by Guiso et al (2003), including variables of income may underestimate the effect of religion since religiosity may positively impact this individual characteristic.…”

Does religion influence the household finance? Evidence from Europe

“…Baxamusa and Jalal (2014) demonstrate that firms located in Catholicmajority counties in the USA have more leverage and conduct debt issuances more frequently, which is consistent with Catholics willing to assume higher levels of risk. Further, Dragota et al (2018) report that companies located in predominantly Catholic and Orthodox countries are more indebted than those from mainly Protestant countries. Additionally, Kumar et al (2011) reveal that in regions where Catholics prevail over Protestants, investors exhibit a stronger propensity to hold lottery-type stocks, employee stock option plans are more popular and the magnitude of the negative lottery-stock premium is larger.…”