National cultural effects on leverage decisions: Evidence from emerging-market ADRs

Wang, Daphne; Esqueda, Omar A.

doi:10.1016/j.ribaf.2013.06.006

Cited by 41 publications

(38 citation statements)

References 66 publications

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“…We focus on PD, as it is particularly relevant for GHG disclosure strategies across countries. PD is defined by Hofstede et al (, p. 61) as “the extent to which the less powerful members of institutions and organizations accept and expect that power is distributed unequally.” It measures how equally or unequally power is spread among members within a society and how readily inequality is accepted (D. Wang & Esqueda, ). A lower score for PD indicates a preference for deliberation and mutual dependence between subordinates and their chief together with authority based on secular–rational arguments, whereas a higher score suggests that power is more concentrated and the powerless tend to accept this as a fact of life.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

The direct and moderating effects of power distance on carbon transparency: An international investigation of cultural value and corporate social responsibility

2018

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There are limited studies on the influence of national culture on corporate social responsibility, and thus, the issue is underexplored. Using an international sample, we show that higher power distance decreases corporate carbon transparency. In addition to this direct effect, we find that power distance also plays a moderating role in the relationship between carbon performance and carbon transparency. We report evidence of a negative association between carbon disclosure and carbon performance in our sample firms, which suggests that disclosure is driven by legitimation purposes. Further findings demonstrate that the tendency toward legitimation is more pronounced in countries with high power distance, which implies that a lower concentration of power promotes corporate social responsibility and reduces carbon opaqueness. Overall, our findings significantly enhance understanding of the role of culture in managerial response to climate change. Such an understanding is extremely important because climate change must be managed by people, and people are influenced by the underlying national cultural preference.

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Section: Hypothesis Developmentmentioning

confidence: 99%

The direct and moderating effects of power distance on carbon transparency: An international investigation of cultural value and corporate social responsibility

2018

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“…Uncertainty avoidance is shown to be positively related to cash holdings (Chang and Noorbakhsh, ; and Chen et al., ) and negatively to corporate risk taking (Li et al., ). Uncertainty avoidance is also shown to have an effect on corporate debt maturity (Zheng et al., ), investors’ risk preferences (Rieger et al., ), and leverage decisions (Wang and Esqueda, ). Finally, long‐term orientation is shown to have a positive association with the level of cash holdings (Chang and Noorbakhsh, ).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…Finally, long‐term orientation is shown to have a positive association with the level of cash holdings (Chang and Noorbakhsh, ). It has also been shown to have a significant impact on firm's hedging decisions (Lievenbrück and Schmid, ), M&A activity (Ferris et al., ), IPO underpricing (Costa et al., ), and leverage decisions (Wang and Esqueda, ). In the next few paragraphs we discuss the implications of each of these traits for cash valuation.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…Individualism is shown to influence corporate investments (Shao et al., 2010), momentum (Chui et al., ), corporate debt maturity (Zheng et al., ), earnings momentum profit (Dou et al., ), investors’ risk preferences (Rieger et al., ), post‐acquisition performance (Chakrabarti et al., 2009), and M&A activity (Ferris et al., ). Uncertainty avoidance is shown to have an effect on corporate debt maturity (Zheng et al., ), investors’ risk preferences (Rieger et al., ), and leverage decisions (Wang and Esqueda, ). Finally, long‐term orientation is shown to impact firm's hedging (Lievenbrück and Schmid, ), M&A activity (Ferris et al., ), IPO underpricing (Costa et al., ), and leverage decisions (Wang and Esqueda, ).…”

Section: Introductionmentioning

confidence: 99%

“…Uncertainty avoidance is shown to have an effect on corporate debt maturity (Zheng et al., ), investors’ risk preferences (Rieger et al., ), and leverage decisions (Wang and Esqueda, ). Finally, long‐term orientation is shown to impact firm's hedging (Lievenbrück and Schmid, ), M&A activity (Ferris et al., ), IPO underpricing (Costa et al., ), and leverage decisions (Wang and Esqueda, ).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

National Culture and the Valuation of Cash Holdings

Orlova¹,

Rao²,

Kang

2017

Business Fin & Account

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Prior studies document that national culture traits are systematically related to cash holdings and attribute this to managerial cultural predispositions. However, it is possible that these preferences reflect investors' cultural preferences and that managers are simply catering to investors' preferences. It is also not clear whether the cash holding effects previously documented are value maximizing. By examining the impact of national culture traits on cash valuation, we are able to provide insight into these questions. Specifically, we examine the effect of three national culture traits -individualism, uncertainty avoidance and long-term orientation -on firm cash valuation. Our results suggest that the previously observed effects of cultural traits on cash holdings and attributed to managerial cultural biases do not reflect investors' preferences and are not value maximizing.

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Corporate social responsibility and capital structure: Moderating effect of culture

Mhiri,

Ajina,

Hussain

et al. 2024

Corp Soc Responsibility Env

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This paper investigates how cultural dimensions influence the relationship between corporate social responsibility (CSR) and a company's financing decisions. The study analyzes data from 780 non‐financial companies over the period 2011 to 2021. We provide strong evidence that CSR activities are negatively associated with the use of debt financing. Moreover, in cultures with high power distance, masculinity, long‐term orientation, indulgence, and uncertainty avoidance, intensified CSR efforts can reduce a firm's access to equity capital by decreasing informational asymmetry and agency costs. However, in more individualistic cultures, these cultural dimensions do not significantly affect the relationship between CSR and equity financing.

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National cultural effects on leverage decisions: Evidence from emerging-market ADRs

Cited by 41 publications

References 66 publications

The direct and moderating effects of power distance on carbon transparency: An international investigation of cultural value and corporate social responsibility

The direct and moderating effects of power distance on carbon transparency: An international investigation of cultural value and corporate social responsibility

National Culture and the Valuation of Cash Holdings

Corporate social responsibility and capital structure: Moderating effect of culture

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