The implicit norms of segregation and hierarchical order embedded in seniority culture may impede the flow of corporate information, weaken internal oversight, and thus breed corporate violations. Based on this, this paper breaks away from the traditional paradigm of institutional and contractual theory and focuses on the effect and mechanism of seniority culture on corporate violations from the perspective of informal institutions. Using the data of A-share listed companies in Shanghai and Shenzhen from 2008 to 2021, this paper empirically finds that seniority culture significantly increases the probability and frequency of company violations. Further testing reveals that seniority culture aggravates the propensity of firms to commit fraud mainly through two paths: weakening internal oversight and reducing information quality. It is also found that the negative effect of seniority culture on corporate violations are more pronounced in firms with state-owned ownership, higher power concentration, greater performance pressure, and male chairmen. This paper enriches the research on corporate violations by deepening the understanding of the cultural soil on which corporate violations depend and the logic of their power from the perspective of implicit norms. It also has important practical implications for breaking down identity barriers within organizations and stimulating the vitality of individual employees to better utilize the subjective governance value of employee groups.
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Foreign Economics & Management
LiZengquan, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
YinHuifang HeXiaogang LiuJianguo, Vice Editor-in-Chief
Seniority, Implicit Norms, and Corporate Violations: A Study from the Perspective of Informal Institutions
Foreign Economics & Management Vol. 47, Issue 02, pp. 53 - 68 (2025) DOI:10.16538/j.cnki.fem.20240827.204
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Lin Cuiliang, Xu Xixiong, Wu Linchun. Seniority, Implicit Norms, and Corporate Violations: A Study from the Perspective of Informal Institutions[J]. Foreign Economics & Management, 2025, 47(2): 53-68.
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