Corporate cash holdings, uncertainty avoidance, and the multinationality of firms

Culture, agency costs, and dividends

“…As Hypothesis 3 suggests, shareholders and corporate insiders in societies with high uncertainty avoidance put greater emphasis on lower but predictable streams of dividends. In line with the previous evidence (Khambata and Liu, 2005;Ramirez and Tadesse, 2009;Chang and Noorbakhsh, 2009), these results also indicate that investors in high uncertainty avoidance countries accept lower cash distributions that accommodate companies with higher levels of cash and thus provide a cushion against potential unforeseeable financial hardship. The difference in average dividend-to-earnings ratios between high and low uncertainty-avoiding cultures is 12%.…”

“…As substantial cash dividend distributions reduce firms' financial slack and flexibility, firms in uncertainty-avoiding societies may regard high dividend payouts as less acceptable. This conjecture is consistent with the empirical evidence that firms in more uncertainty-avoiding countries maintain higher levels of cash to hedge against unpredictable adverse future events (Ramirez and Tadesse, 2009;Chang and Noorbakhsh, 2009). Individuals in low uncertainty avoidance countries, in contrast, ''share an enhanced cultural inclination toward [.…”

Catch me if I fall: Cross-national differences in willingness to take financial risks as a function of social and state ‘cushioning’

“…The USA scores lower in uncertainty avoidance than Italy and Austria. Uncertainty avoidance has been associated with risk perceptions and business behavior (Bontempo et al, 1997;Ramirez & Tadesse, 2009;Rieger et al, 2014). Thus, individuals in the USA may generally perceive risky situations as less threatening, resulting in higher risk-taking willingness.…”

Corporate governance and cash holdings in MENA: Evidence from internal and external governance practices

“…For example, in their international sample of 45 countries, Dittmar, et al (2003) include only Jordan and Egypt of MENA. Ramirez and Tadesse (2009) include only Egypt in their international dataset. Otherwise, to the best of our knowledge, there is no other evidence on cash holdings and corporate governance in the MENA countries.…”