We investigate the effect of culture on corporate governance using the extraordinary opportunity that the corporate landscape of Switzerland provides. Within a single institutional framework (e.g., Swiss federal corporate law), we use language (German and French) and religion (Roman Catholicism and Protestantism) as proxies for culture. These groups share a distinct set of values particularly in their tolerance for hierarchical structures. We observe that firms in Swiss French areas and firms in Roman Catholic cantons are more likely to have one-tier boards, whereas two-tier boards are more prevalent in Swiss German areas and Protestant cantons. Furthermore, board composition is significantly driven by language. In contrast, ownership and equity structure are not significantly related to culture.

Ideally, corporations are directed by boards whose directors provide valuable human capital that match the firms' strategy. We investigate how directors' human capital (international experience, industrial know-how, CEO experience, and financial know-how) affects firm performance including the firm's strategy (diversification and internationalization) and how human capital is related to acquisition strategies (non-diversifying and international acquisitions). Our sample consists of 560 firm-year observations in Switzerland. We find empirical evidence that directors' human capital affects firm performance and that this relationship depends on the firm's strategy. Furthermore, human capital is also correlated with acquisition strategy. The study shows that focusing on board independence and compliance issues may be unrewarding in board research and practice.

Regulators, proxy advisors and shareholders are regularly calling for independent directors. However, at the same time, independent directors commonly engage in numerous outside activities potentially reducing their time and commitment with the particular firm. Using Tobin's Q as an approximation of market valuation and controlling for endogeneity, our empirical analysis reveals that neither is independence positively related to firm performance nor are outside activities negatively related to it. Nevertheless, we find that -nonindependent -executive directors, former executives and family representatives have a positive relationship with Tobin's Q. Conversely, -independent -outside executives are negatively related with firm valuation. Moreover, the study indicates that the frequency and IntroductionMost economists agree that a board of directors' essential duty is to ensure that a firm is led in the shareholders' best interests. The board of directors is positioned between a firm's top management and its shareholders who typically have insufficient ownership to influence firm policies. Therefore, prescriptive legislation imposes serious responsibilities on directors and defines the public expectation of their performance. Two important responsibilities of the board of directors are the monitoring and advising of the top management. The first task, which is rooted in agency theory, stresses the importance of the director's role in solving the principal-agent conflict between managers and shareholders (see Jensen and Meckling 1976; Fama and Jensen 1983). In this context, the board's independence from management is crucial. The second task emphasizes the importance of the director's role providing ties with the external business environment and professional specialist skills (for example, strategic planning). This latter responsibility is associated with outside activities (for example, outside directorships, executive positions or political engagements) of directors and is based on resource dependence theory (Pfeffer and Salancik 1978). However, these two roles are subject to trade-offs.The first trade-off relates to the position (or independence) of the board vis-à-vis the top management. Board directors need sufficient information about the daily business and risks of the firm to do a proper job. The information asymmetry between the management and the board of directors can be reduced by continuing communication of the two parties. Executive directors (insiders) can close this gap. However, insiders virtually supervise themselves and executive directors may be too involved in daily business, so that their view may conflict with an outside, more neutral, perspective. In addition, also a close relationship, friendship or even dependence on the chief executive officer (CEO) and his executive board can impair the board's independence and lead to collusion and conflicts of interest. For instance, compromised board decisions may involve executives being replaced too late or paid too much, counter to shar...

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We investigate the effect of individualism-a dimension of culture that is strongly associated with entrepreneurship-on venture-capital investments using a large crosscountry sample. Our sample consists of 1496 country-year observations and includes 88 countries from 1998 to 2014. Controlling for economic conditions, the legal environment, and different aspects of culture, we find that individualism is positively and significantly related to venture-capital investments and explains 30% of crosscountry variation. This result is stable across different subsamples, several measures of venture-capital investments, and even holds when using the political system 200 years ago as an instrument for individualism. The quality of formal institutions (rule of law) and entrepreneurial attitudes (uncertainty avoidance) partially mediate the effect of individualism on venture-capital investments, while economic conditions (GDP per capita) moderate this effect.