Finance professor’s corporate culture study featured
in 'MIT Sloan Management Review'

The impact of corporate culture, anecdotally, has long been credited for the success and failure of many companies. However, quantitative measurement of that impact has been non-existent.

Henrik Cronqvist, assistant professor of finance and winner of Fisher's 2007 Pace Setter Faculty Research Award, co-authored a January 2007 working paper, “Does Corporate Culture Matter for Firm Policies?” The study was featured in the April issue of MIT Sloan Management Review.

Douglas LambertCronqvist and his co-authors explored measurable and meaningful characteristics through which corporate culture manifests itself. His co-authors were Mattias Nilsson, assistant professor of finance at University of Colorado at Boulder, and Angie Low, a Ph.D. student at Fisher.

Their study suggests that when companies spinoff business units, those new corporations assume their parent companies' culture. Those similarities, the authors propose, are evident in the comparison of the parents’ corporate policies with their spinoffs.

The researchers studied 217 spinoffs (excluding those forced by mergers and those owned by multiple parents) from 1980 through mid-2005 to see whether those companies' policies more closely resembled those of their parents or industry peers.

“The authors' findings confirmed that the apple does not fall far from the tree,” according to the article in MIT Sloan Management Review. The spinoffs' policies in many cases were more similar to parent company policies than to industry norms. This held true for each of the dozen policies that the researchers studied, including those in the categories of investment styles (such as preferences for growth by acquisition), financial policies (such as financial leverage, cash holdings and dividend policies) and budgeting practices (such as research and development spending and advertising budgets).

In Cronqvist’s view, the high-level policies measured in the study are symptoms of the underlying culture – the shared norms beliefs and values of a firm’s employees, as he defines culture.

To read the entire article in MIT Sloan Management Review, visit