Religiosity, Higher Purpose, and Firm Value : The Differential Effects from Corporate Board Oversight

Using a novel measure, we study how the religiosity of independent directors induces a higher sense of corporate purpose and how that affects firm value. We find that religious directors differentially conduct board oversight and help propagate a corporate culture consistent with an authentic organizational higher purpose. Notably, especially when they lead the active board oversight activities, these religious or higher purpose directors not only enhance board oversight benefits, such as better accounting earnings quality and less excess-CEO-compensation, they also take a characteristically longer-term perspective on CEO performance evaluation, which, in turn, increases long-term investments and preserves firm value