Influence of CEOs’ religious affiliations on firms’ advertising spending and shareholder value

Purpose: This study aims to answer two unique related questions on the overarching relationship between a CEO’s personal religious affiliation, the firm’s advertising spending decision and its shareholder value. First, does the CEO’s religious affiliation, a proxy for risk taking, influence the firm’s advertising spending decision? Second, does the advertising spending decision mediate the relationship between the CEO’s religious affiliation and the firm’s shareholder value? Design/methodology/approach: This study uses data on the religious affiliations of CEOs of publicly listed US firms, 1992–2014, from Marquis Who’s Who; advertising spending and shareholder value from Compustat, and panel data-based regression models including CEO characteristics from ExecuComp, and firm-, industry- and time-based controls. Findings: We find higher advertising spending levels for Protestant over Catholic-led firms, and advertising spending mediates the relationship between a CEO’s religious affiliation and the firm’s shareholder value. Research limitations/implications: Marketing theory needs to incorporate the missing but fundamental effect of the CEO’s religious affiliation-based values on decisions and outcomes. Practical implications: Boards of Directors may need to align the CEO’s and their firm’s spending goals. Originality/value: While previous studies focused on the influence of religious affiliation on consumers’ attitudes and behavior, and executives’ financial and R&D spending decisions, this study, to the best of the authors’ knowledge, is the first to investigate the effect of a CEO’s religious affiliation on the firm’s advertising spending decision and its shareholder value.