In the Radiance of Enlightenment the Influence of Nontheistic Religions on Corporate Default Risk

We find that Chinese public firms surrounded by a higher number of Buddhist and Taoist temples are associated with relatively lower expected default risk (EDF). In contrast to the widely documented impact of Western religiosity on corporate behaviors, our mechanism tests indicate that lower EDF related to religious site density is primarily driven by better corporate governance and not by a surge in corporate conservatism. Finally, we find that the default risk lowering effect in China is more pronounced when firms and firms’ managers are less politically exposed