Career Exposure to Religion and CEO Effort: Evidence from China

Abstract

While the extant literature documented that religion is associated with fewer agency conflicts of CEOs from decreased private profit, this study aims to explore historical Buddhist values for CEOs’ attention on increased private costs, i.e. health, and ultimately willingness to make efforts to stay on the job. Using samples on Chinese listed firms, we find that CEOs exert less effort in promoting firm value when firms are closer to Buddhist monasteries. This negative impact is weakened when the firm faces stronger corporate governance or fiercer market competition. Nevertheless, firms exposed to denser Buddhist atmospheres exhibit higher efficiency. Our study highlights the opposite roles religion plays in affecting agency conflicts and the necessity of distinguishing private profits from private costs.