Research seeks to decode the complex world of finance and social dynamics

Natasha Katchuk

Meet Dr. Min Maung (PhD), a Professor of Finance and Management Science, who wears multiple hats as an Edwards Enhancement Chair in Business, and the Acting Department Head at the Edwards School of Business. His research explores topics such as dividend signaling, asymmetric information, corporate governance, and venture capital. Adding to this impressive portfolio, Dr. Maung is currently serving as Editor in Chief of the Advanced Business and Finance Journal and was recently awarded a grant from the Social Sciences and Humanities Research Council (SSHRC) national research grant.

Maung’s research is published in peer-reviewed academic journals including the International Review of Financial Analysis, Journal of International Financial Markets, Institutions and Money, Journal of Small Business Management, Financial Review, Journal of Business Ethics, International Review of Economics and Finance, International Review of Economics and Finance, Review of Pacific Basin Financial Markets and Policies, Studies in Economics and Finance, International Journal of Behavioral Accounting and Finance, International Journal of Managerial Finance, and the Research in International Business and Finance.

Cultural elements and corporate financial performance
Dr. Min Maung’s main research focus is exploring how culture plays a role in shaping economic outcomes, especially in the context of corporate financial behaviour and financial performance. Maung’s interest in this area was piqued after completing a traditional corporate finance-focused PhD. His research seeks to answer how culture, encompassing aspects like religion, language, and social norms, affects economic and financial outcomes. This area of research is relatively new within the field of financial economics, and Maung is exploring how cultural factors such as trust, religious beliefs, and social norms influence financial behavior.

Researchers understand how culture affects many issues but how it matters for financial outcomes is uncharted. Religion, culture, and finance are part of our daily lives and the culture and norms of the places you live in turn affect how you perceive things. This in turn affects your decisions, financial or otherwise. His findings are appliable to many jurisdictions, including Saskatchewan and Canada.

While sociologists have studied cultural elements for centuries, the financial economics perspective and inclusion of cultural factors is a recent recognition, offering a wealth of opportunities for further investigation. In sociology, for example, a country’s institutional framework is usually divided into formal and informal institutions. Culture and norms would belong to informal institutions; the cognitive and normative institutions. Maung’s area of research revolves around the influence of culture, including religion, language, and social norms, on financial and economic outcomes.

There is new evidence that suggests informal institutions matter as well, sometimes even more so than formal institutions such as laws. Maung published a paper in the Journal of Small Business Management and found that culture matters more than regulations for development of entrepreneurial finance. He is working to understand how these cultural elements impact behaviors such as trust, risk aversion, and financial decision-making, influence corporate financial behavior.

The interplay between societal norms and corporate conduct
Dr. Maung is currently a principal investigator on a $50,000 SSHRC grant where he is investigating how social norms affect corporate board diversity. The location, whether it is your residence or a firm's headquarters, significantly influences corporate behavior. Maung is looking at how social tolerance in a place affects corporate board diversity. He is focused on gender and racial diversity and anticipating that a tolerant society will influence corporations and their boards, although results are pending.

A closely related research area Maung is passionate about is studying how societal norms and social tolerance in a location can affect corporations located there. A research paper being prepared to be submitted to the Journal of Business Ethics delves into the transfer of societal values to corporate boards and their influence on financial performance and corporate social responsibility. He poses the notion that the social norms of a city, such as Saskatoon or Toronto, can influence the values and behavior of corporations headquartered in those locations. By exploring the transference of societal values to corporate boards, Maung hopes to demonstrate the intricate connection of the norms of a society, such as tolerance and acceptance, and the subsequent influence on financial performance and corporate social responsibility of a corporation. The paper’s results have been consistent with this prediction.

Religion, corporate behaviour, and financial outcomes
Maung published a series of papers relating religion to corporate behavior. His findings show that religious people are risk-averse, and this aversion to risk affects their corporate investment decisions for mergers and acquisitions, venture capital investments, etc. Maung and Weisu Yu published a paper in the Journal of International Financial Markets, Institutions and Money and looked at how religion is related to corporate social responsibility (CSR). They found that firms located in religious countries place more emphasis on CSR ratings of target firms when they are making merger and acquisitions decisions.

A practical implication of Maung’s research involves a study on donations from religious CEOs. Maung, Miller, Tang, and Xu (2020) looked at how CEO religion affects corporate donations. The paper was published in the Journal of Business Ethics and the authors explored how culture and religion affect corporate donations. The research investigated how donations from religious CEOs are perceived by financial markets compared to donations from non-religious CEOs. Maung and co-authors found that when a donation comes from a religious CEO, financial markets react more favorably, implying that such donations are seen as more genuine and meaningful, rather than merely for show. The results indicated that cultural and religious factors can significantly influence financial decision-making and market reactions. It underscores the connection between cultural factors, trust, and financial outcomes and demonstrates the importance of considering these cultural elements when studying corporate behavior and financial outcome.

Dr. Maung is currently supervising an Edwards PhD student in Finance who is developing a "core sin index" related to location-specific behaviors, such as gambling and adult entertainment, and its influence on corporate behavior. They are investigating how a firm's location, particularly in cities like Las Vegas compared to more conservative areas, can affect its behavior, such as corporate social responsibility and ethical practices.

Impact of trust on investment behaviour
In a recently published paper in the International Review of Financial Analysis, Maung investigated to what extent the level of trust we place in others significantly influences our willingness to engage in business transactions with them. The study was based on a cross-country analysis of mergers and acquisitions and found that countries where people are more trusting are more likely to be overseas. Maung emphasized that while one might assume that overly trusting individuals are at a disadvantage, they, in fact, engage more, learn more, and ultimately benefit in future endeavors — a result confirmed by his findings. Trust matters for cross-country investments and for intra-country entrepreneurial financing. This should support the need for more open, tolerant, and trusting societies.

The outcomes of Maung’s research are expected to impact closed or less open societies the most. These societies, characterized by limited contact with the outside world, stand to gain the most from opening up and fostering trust. The findings emphasize the tangible and intangible benefits associated with greater openness and trust, including improved financial performance. This research is relevant not only for the field of finance but also for broader societal implications, as it underscores the advantages of trust and openness, offering potential benefits for various sectors of society, including the economy and public policy applications. In general, trust can influence business transactions, fostering open and collaborative interactions and resulting in financial and societal benefits. This can be applied to inter-provincial transactions as well.

To learn more about Dr. Maung’s work, check out his profile page!

Social Sciences and Humanities Research Council Insight Development Grant, Min Maung *(Principal Investigator), "Social Norms, Board Gender Diversity, and Firm Performance," $50,213. June 1, 2022, to May 31, 2024

Maung, M., 2022. Trust and cross-border mergers and acquisitions. International Review of Financial Analysis 83.

Maung, M., Tang,Z., *Wilson, C., and Xu, X, 2021. Religion, risk aversion, and cross border mergers  and acquisitions. Journal of International Financial Markets, Institutions and Money 70.

Chowdhury, R., Maung, M., 2020. Accessibility to external finance and entrepreneurship: A cross-country analysis from informal institutional perspective. Journal of Small Business Management, DOI: 10.1080/00472778.2020.1726125

Maung, M., Tang, Z., Xu, X., 2020. Religion and Venture Investing: A Cross-Country Analysis. Financial Review 55 (3),  433-460.

Maung, M., Miller, D., Tang, Z., and Xu, X, 2020. Value-enhancing social responsibility: Market reaction to donations by family vs. nonfamily firms with religious CEOs, Journal of Business Ethics 163, 745–758.

Maung, M., Wilson, C., Yu, W, 2020. Does Reputation Risk Matter? Evidence from Cross-Border Mergers and Acquisitions, Journal of International Financial Markets, Institutions and Money 66, 101 204

Maung, M., Shedden, M., Wang, Y., Wilson C. 2019. The investment environment and cross-border merger and acquisition premiums, Journal of International Financial Markets, Institutions and Money 59, 19-35

Chowdhury, R. H., Maung, M., 2019. Historical ties between nations: How do they matter in cross-border mergers and acquisitions? International Review of Economics and Finance, 58, 30-48.

Li, J., Maung, M., Wilson, C., 2018. Governance and financial development: A cross-country analysis, Journal of International Financial Markets, Institutions and Money 52 (C), 227-239. 

Gill, A., Maung, M., Chowdhury, R. H., 2016. Social capital of non-resident family members and small business financing: Evidence from an Indian state, International Journal of Managerial Finance 12 (5), 558 – 582.

Maung, M., Tang, X., Wilson, C., 2016. Political connections and industrial pollution: Evidence based on state ownership and environmental levies in China, Journal of Business Ethics 138 (4), 649–659.

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