This paper sheds light on the role of religion as a separated institutional logic on firm behavior and performance,\nparticularly in the context of corporate development strategies and decision making. We argue that religiosity in a\nfirm�s environment influences decision making of organizations when initiating and evaluating corporate development\nstrategies and hence leading to uneven distribution of economic activity. We focus on leveraged buyouts (LBOs) an\nimportant strategic initiative associated with high levels of perceived risk from increased financial leverage, a drastic\nchange in governance structure, and potential conflicts between stakeholders. We contend that local religiosity reduces\nthe likelihood of LBO transactions that nonetheless creates a favorable selection process resulting in a lower rate of\nLBO bankruptcies. We find results supporting our predictions in a unique sample of 4,633 US buyouts in 1980-2003.
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