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Despite the general agreement that a firm embodies its own culture, there is still a lack of empirical research on how a firm’s culture affects its value. Another caveat on previous studies is that they implicitly assume that a firm’s culture does not vary over time. In this paper, we examine the following two questions to address this lack: (1) Does a firm’s culture affect the firm’s value? (2) If a firm’s culture varies at different life cycle stages, do these changes have an impact on firm value? By using a competing values framework, we identify four types of corporate culture—adhocracy, market, clan, and hierarchy—and use life cycle stages to proxy for changes in a firm’s environment. The results reveal that adhocracy culture has a positive effect on a firm’s value. In contrast, we find a negative association between hierarchy culture and a firm’s value. This can be interpreted as the features of adhocracy culture, which gives autonomy to its members (flexible and discretion) and keeps challenging a firm to grow (external focus and differentiation), positively impacting firm value more than the other cultures. Furthermore, at a growth stage in which a firm faces dynamic environmental changes, both adhocracy and clan cultures have an incrementally positive effect on firm value. This implies that firms in mature or decline stages lose dynamic changes in their operational environment, therefore, the effect of culture on firm value is restricted in those stages.

This study investigates the economic impact of the financial regulations that aimed to control the housing market in Korea during the reign of late President Ro's Administration, which had diligently fought against the then speculative bubble in the Korean real‐estate market. We test for the validity of the general prediction that the financial regulations in the form of the loan‐to‐value (LTV) and debt‐to‐income (DTI) restrictions would have adverse impacts on the value of the firms operating in the mortgage‐lending industry. In this event study, we select two critical days as event dates and check whether the stock prices of the financial firms react negatively to the announcements of the regulations. Overall, the initial imposition of the DTI restrictions (i.e., the first event) adversely affects those banks that possess a relatively large number of mortgage loans in their asset portfolio. By contrast, banks that hold a small number of mortgage loans appear to benefit from the risk‐reducing effect of the DTI regulation. Subsequently, the reinforcement of the LTV and DTI rules (i.e., the second event) has negative impacts on the banks with large mortgage loans. The degree of this adverse effect is greater in the second event than in the first event (i.e., the DTI restrictions). The reinforced regulations also unfavorably affect the savings banks with large mortgage loans but to a lesser degree compared with their counterparts in the banks. Meanwhile, the reinforcement of the financial regulations has negligible impacts on the banks and the savings banks with smaller mortgage loans.