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Companies that hadn’t restated financial results were more likely to be located in religious communities, a Rotman study finds.


The Globe's roundup of research from business schools.

Here's a stock tip you're unlikely to hear from your broker: For a safe bet, invest in firms with headquarters in cities and regions where residents go to church.

A study by Jeffrey Callen, who holds the Joseph L. Rotman Chair in Accounting at the University of Toronto's Rotman School of Management, found that companies located in U.S. regions where residents are more likely to adhere to a religious affiliation had fewer crashes in their stock prices.

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The results had little to do with whether senior managers were religious themselves. Rather, the study concluded that managers of firms in religious communities were less likely to withhold bad corporate news from shareholders. As a result, the companies were less likely to restate financial results and suffer a subsequent crash in stock price.

One reason, according to Dr. Callen, is that most religions promote ethical behaviour and discourage manipulation of others. Those who don't adhere to these social norms are likely to be stigmatized. "The more religious the milieu you are in, probably the greater the cost in terms of social stigma," Dr. Callen says.

Another reason is that religious environments tend to foster more potential whistle blowers, he adds. "They will out you."

The study used figures from the American Religion Data Archive, which provides a breakdown of religious affiliation and the number of churches by county in the United States. It also looked at financial statements and stock market performance of publicly held firms over 30 years.

Dr. Callen and his co-author identified companies that had restated financial results, usually as a result of accounting irregularities, and that had subsequently suffered a stock price crash. They compared those to firms within the same industry that hadn't suffered a drop in stock price. The firms that hadn't restated financial results were more likely to be located in religious communities.

The vast majority of residents included in the database belonged to Christian denominations. But Dr. Callen, who is an orthodox Jew, believes the same would hold true of all religions. "Every religion says you shouldn't be manipulating your fellow man," he says.

He also believes that the same would hold true of Canadian firms, although there is no comparable database of religious affiliation in this country.

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The message for investors is that they should look for companies in more religious milieus in which to invest, says Dr. Callen, who conducted the study with Xiaohua Fang, a former Rotman graduate student and now assistant business professor at Georgia State University. The paper is due to be published in the Journal of Financial and Quantitative Analysis.

Upward mobility, part-time

A long-term study of senior managers and high-ranking professionals who worked a shorter work-week found few differences in their career outcomes compared to those of their colleagues who went back to full-time work.

The study, co-authored by Mary Dean Lee, a professor of organizational behaviour and human resource management at McGill University's Desautels Faculty of Management in Montreal, looked at the career paths of 73 managers and professionals over six years. One third of the participants were Canadian and the rest were from the United States. Almost 90 per cent were women.

Dr. Lee and her co-authors started the research in 1997 by identifying managers and professionals who had negotiated a reduced-workload arrangement, such as working three or four days a week, to better manage their work and home responsibilities. The researchers followed up with the participants six years later to find out how many of them had sustained the part-time arrangement and how it had affected their personal and career goals.

The participants were asked to provide details about objective measures of career success, such as salary and numbers of promotions, as well as subjective measures of success – personal evaluations of their career achievements.

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A surprisingly large proportion of participants – 47 per cent – were still working part-time after six years. Follow-up interviews with the participants revealed that those who had gone back to full-time work had received more promotions. But, the mean salary of the part-time group, calculated on a full-time equivalent basis, was virtually the same as those working full time.

"We thought that full-timers would be making more money," Dr. Lee says. "That just wasn't the case."

She says the workers who were able to sustain the part-time work arrangements were likely highly valued employees that the company didn't want to lose.

The study also revealed little relationship between objective and subjective measures of career success. Those who earned higher salaries or had received more promotions weren't necessarily those who were happiest with their career choices. The paper's finding seemed to challenge the idea of "the career mystique," that succeeding in one's career is the most desirable goal to which everyone aspires, says Dr. Lee. "I think there's a trend away from that being the dominant value" among both women and men, she says.

Many of the participants in the study felt they had achieved a high degree of subjective career success even though they lagged in objective measures. "These individuals transcended the temptations of the career mystique and feel successful in their careers," the authors write.

Dr. Lee, who herself worked reduced hours when her children were young, says part-time work arrangements have become more common and widespread throughout many industries in recent years. The study was published in the Journal of Social Issues in December of 2012.

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Plus-sized pressure

Walk into any department or grocery store and it's easy to feel overwhelmed by the many product choices. But for some people the opposite is true. They feel ignored by a marketplace that provides them with too few options.

A study by Eileen Fischer, marketing professor at York University's Schulich School of Business in Toronto, and Daiane Scaraboto, a former Schulich graduate student and now assistant professor at Pontificia Universidad Catòlica de Chile, looks at how one of these groups – consumers of plus-sized women's fashions – are agitating for change.

The study examines the growing clout of bloggers, or self-styled "fatshionistas," who are fashion-lovers that wear plus-sized clothing and the strategies they use to demand more product choice.

The authors identified three ways in which the bloggers do this (all through their blogs): by persuading marketers that there is a profit to be made by making available more plus-sized clothing choices; by praising those that do provide more options and encouraging their readers to support them; and by forming partnerships with more powerful industry representatives such as fashion magazines and purveyors of plus-sized fashions to reach a wider audience.

In conducting the study, the authors followed blog posts and online conversations between bloggers and their readers for more than three years and conducted interviews with select bloggers.

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The findings lead to a better understanding of "when, why and how consumers can change markets" and help advance "marketing practice, marketing theory and the well-being of consumers and of society as a whole," the authors write. The paper was published in the Journal of Consumer Research in April of 2013.

Rosanna Tamburri can reached at

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