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Creative culture, risk‐taking, and corporate financial decisions
Author(s) -
Ucar Erdem
Publication year - 2019
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/eufm.12198
Subject(s) - endogeneity , organizational culture , creativity , business , robustness (evolution) , cash flow , financial risk , cash , economics , finance , management , econometrics , psychology , social psychology , biochemistry , chemistry , gene
I examine how creative culture affects corporate financial decisions. Firms have corporate risk‐taking behavior and policies consistent with variations in local risk‐taking propensity induced by creative culture. Firms located in areas with a strong creative culture have higher levels of risk exposure, investment, and growth. These firms also accumulate more cash consistent with the precautionary motive. My findings remain robust after controlling for endogeneity and a series of robustness checks. The empirical findings are consistent with the risk‐taking tendency associated with creativity and creative culture. This paper introduces the role of creative culture and risk‐taking in corporate financial decisions.