Local religiosity and financial advisor misconduct

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2024-GS Alert manu - CowanA-Religion and Financial .pdf (877.28 KB)

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Date
2024-03-24
Authors
Gao, Lei
Han, Jianlei
Pan, Zheyao
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Elsevier B.V.
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Cowan, Arnold
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Finance

The Department of Finance seeks to provide knowledge of the descriptive, behavioral, and analytical background of financial management, in preparation for positions in sales management, marketing research, retail, etc.

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The Department of Finance was formed in 1984 in the College of Business Administration (later College of Business).

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1984–present

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Abstract
We find that local religious social norms mitigate professional misconduct by financial advisors. Using publicly disclosed misconduct data, we find that financial advisors working in areas with greater religious participation are less likely to violate ethical standards. When advisors move to counties with greater religious participation, their misconduct rates decrease. The effect of local religiosity is robust across population density levels, misconduct types, and market conditions. We strengthen identification by using shocks to religious participation following local disclosures of sexual abuse by Catholic priests. The findings show that local religiosity restrains misconduct not only in previously studied corporate financial settings but also when professionals provide financial services to individuals and households.
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This accepted article is published as Cowan, A.R., Gao, L., Han, J., Pan, Z., Local religiosity and financial advisor misconduct. Journal of Corporate Finance, 86(June 2024);102568. https://doi.org/10.1016/j.jcorpfin.2024.102568. Posted with permission.
JEL classification G24;G28;G41;G59;Z12
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