Corporate Culture and Performance in European Banking

This paper analyses the casual relationship between corporate culture and shareholder value using a sample of large banks in the French, German, Italian and U.K. banking systems over the 2001 to 2003 period. Firstly we measure corporate culture using language as it particular artifact and developing a cultural survey based on the application of a text-analysis model to a corpus of reference texts produced by the sample of banks. Secondly, we measure shareholder value using an Economic Value Added estimated through a procedure tailored to account for banking peculiarities. We posit six hypotheses regarding the relationship between corporate culture and bank profits and shareholder value. Our results noticeably show that bank profit and shareholder value benefit from different orientations of banking corporate culture. Keywords: Shareholder value, Economic Value Added (EVA), corporate culture, text analysis