Corporate Gender Culture
Renee Adams (Oxford Saíd School of Business)
Ali Akyol (University of Melbourne)
Pauline Grosjean (UNSW)

Abstract : We apply computational linguistic models to Australian publicly listed firms’ reports to a gender-equality statutory agency to construct the first systematic measure of ‘corporate gender culture’—firms’ practices pertaining to the treatment of women across a range of dimensions, from recruitment and promotion to maternity leave and sexual harassment. While different practices are associated with female representation at different levels of the hierarchy (employees, managers, executives, board), the practice most robustly associated with firm performance consists in human capital formation opportunities open to all. We use a unique historical experiment that durably shaped gender norms in Australia to establish that: (i) corporate gender culture is shaped by local societal gender norms; and (ii) the relationship between corporate gender culture and firm performance is likely causal. Upon examining the impact of the introduction of government-funded parental leave in 2011, we observe that culture evolves slowly, but policy can shape gender diversity and corporate gender culture.

Corporate Culture As an Implicit Contract
Jessica Jeffers (University of Chicago, Booth)
Michael Junho Lee (Federal Reserve Bank of New York)

Abstract : We develop a measure of corporate culture using coworker connectivity on LinkedIn's platform, and show it is strongly correlated with positive employee relations and satisfaction. Using state-level changes to employment agreements as shocks to explicit contracts, we find that these changes significantly impact employees in weakly connected firms, but have little to no effect on those at strongly connected firms. Our results suggest that firms with strong corporate culture are less dependent on explicit contracts to retain human capital. We document implications for firms' investment decisions and other outcomes.

Trust and Innovation Within the Firm: Evidence from Matched Ceo-firm Data
Kieu-Trang Nguyen (London School of Economics)

Abstract : This paper provides evidence on the effect of trust on innovation within firms. I build a new matched CEO-firm-patent dataset covering 5,753 CEOs in 3,598 large US public firms and 700,000 patents during 2000-2011. To identify the effect of CEO's trust, I exploit variation in generalized trust across the countries of CEOs' ancestry, inferred from their last names using de-anonymized historical censuses, as well as variation in CEOs' bilateral trust towards inventors. First, one standard deviation increase in CEO's generalized trust following a CEO turnover is associated with over 6% increase in firm’s future patents. Second, changes in CEO's bilateral trust towards inventors in different countries (i.e., different R&D labs within multinational firms) or from different ethnic origins in the same firm have comparable effects on inventors' patenting, controlling for CEO and other stringent fixed effects. Trust-induced improvements in innovation are driven entirely by higher-quality patents, consistent with a model in which CEO’s trust incentivizes researchers to undertake high-risk explorative R&D. Finally, I show that across and within firms, CEO's generalized trust is strongly correlated with a broader corporate culture of trust, as measured from the text analysis of one million online employee reviews. The evidence provides a micro-foundation for the well-known macro relationship between trust and growth.