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Influence of CEOs' religious affiliations on firms' advertising spending and shareholder value

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Abstract

Purpose

This study aims to answer two unique related questions on the overarching relationship between a CEO's personal religious affiliation, the firm's advertising spending decision and its shareholder value. First, does the CEO's religious affiliation, a proxy for risk taking, influence the firm's advertising spending decision? Second, does the advertising spending decision mediate the relationship between the CEO's religious affiliation and the firm's shareholder value?

Design/methodology/approach

This study uses data on the religious affiliations of CEOs of publicly listed US firms, 1992-2014, from Marquis Who's Who; advertising spending and shareholder value from Compustat, and panel data-based regression models including CEO characteristics from ExecuComp, and firm-, industry- and time-based controls.

Findings

We find higher advertising spending levels for Protestant over Catholic-led firms, and advertising spending mediates the relationship between a CEO's religious affiliation and the firm's shareholder value.

Research limitations/implications

Marketing theory needs to incorporate the missing but fundamental effect of the CEO's religious affiliation-based values on decisions and outcomes.

Practical implications

Boards of Directors may need to align the CEO's and their firm's spending goals.

Originality/value

While previous studies focused on the influence of religious affiliation on consumers' attitudes and behavior, and executives' financial and R&D spending decisions, this study, to the best of the authors' knowledge, is the first to investigate the effect of a CEO's religious affiliation on the firm's advertising spending decision and its shareholder value.

Keyword

Author Community

[Oh, Hannah; Bae, John] Elon Univ, Elon, NC USA

[Currim, Imran S.] Univ Calif Irvine, Dept Mkt, Irvine, CA 92697 USA

[Lim, Jooseop] Concordia Univ, Dept Mkt, Montreal, PQ, Canada

[Zhang, Yu] China Europe Int Business Sch, Dept Strategy, Shanghai, Peoples R China


Related Article

Source

European Journal of Marketing

ISSN:0309-0566

Year:2020

Issue:Early Access

ESI Discipline:ECONOMICS & BUSINESS;

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