Wayne State professor links strong corporate culture to firm’s financial stability
Francesca Toscano, associate professor of finance at the Mike Ilitch School of Business wants to use her finance research to make a difference in the everyday lives of everyday people.
“Economics is a lot of theory, and you need theory to do good finance research but it’s also about the real world, and I think that is very interesting,” said Toscano. “I changed my Ph.D. career to finance because it’s something that is tangible and has relevancy to people’s lives.”
Her decision to come to Wayne State was made when she had a wonderful experience meeting faculty members, and talking to them about their work.
“I felt very positive, and I liked the way people talked to me,” said Toscano. “Everyone I talked to was speaking the same language, and we were doing similar things. They were all extremely friendly and nice, so I thought that the environment would be a good fit, not just academically but personality wise.”
To help everyday people better understand the corporate world, Toscano conducts research into corporate culture, and the effect that this has on the organization as a whole. She developed this interest along with another Ilitch School colleague.
“There is a lot of attention on soft values, corporate social responsibility, social capital and culture and the importance of having women in the workplace,” explained Toscano. “My colleague and I worked with Trang Doan a Ph.D. student here at Wayne State on a data gathering project.”
Toscano hoped to use these measures of corporate culture to see what effect these variables have on the amount of short-term debt that these firms are taking on. This can be an indicator of company health and is an important metric for investors who are considering buying equity in the company.
“What we found is that firms that have a more developed cultural environment are those that are willing to take on more short-term debt,” explained Toscano. “When short-term debt needs to be renewed, more monitoring is involved. Firms with a strong culture are not scared of being monitored because the strong culture is eliminating problems that would otherwise negatively characterize the manager-shareholder relationship.”
Toscano also discovered that there is a large difference between firms that have primarily female executive leadership as opposed to male executives.
“Women are more careful about rules,” said Toscano. “They are more conservative with risk, less aggressive in their behavior and psychological attitudes, which affects their debt maturity choices.”
Toscano is also involved in teaching the Masters of Science in Finance, and loves interacting with her students, especially Ph.Ds.
“They are going through a similar career path, and that’s very nice because it feels like you are giving something back,” said Toscano. “These students want to learn the material and they bring new expertise and innovative ideas to companies as potential hires. If they have curiosity, they're going to keep pushing.”
-Patrick Bernas, Information Officer III
The Wayne State University Mike Ilitch School of Business prepares students for challenging and rewarding careers, advances the boundaries of scholarly and practitioner knowledge, and enhances the economic vitality of the city of Detroit, the state of Michigan and beyond through its programs, research and community engagement. Established in 1946, the business school was renamed in 2015 in recognition of a $40 million gift from Mike and Marian Ilitch. Thanks to this lead investment, the school moved to a new state-of-the-art building in the heart of the District Detroit in 2018, and academic programming and collaboration with city businesses are expanding. For more information, visit ilitchbusiness.wayne.edu.