New Evidence on National Culture and Bank Capital Structure

Hu, Daniel; Haq, Mamiza; Pathan, Shams; Faff, Robert W.

doi:10.2139/ssrn.2724221

Cited by 6 publications

(13 citation statements)

References 32 publications

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“…Individualism levels influence the company's performance and the way managers decide on the companies' indebtedness levels. This result can be explained by the fact that individualistic companies convey excessive optimism and overconfidence, demonstrating a tendency to ignore the risk associated with a higher debt level (Antonczyk and Salzmann, 2014; Haq et al. , 2018).…”

Section: Resultsmentioning

confidence: 99%

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The cultural dimension in companies' leverage. New evidence using panel data for a European macroeconomic context

Neves

Almeida

Vieira

2022

CCSM

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PurposeThe main objective of this work is to show that the traditional specific characteristics of companies as well as cultural and religious dimensions can influence the leverage of companies in different macro-environmental systems.Design/methodology/approachTo achieve this aim, the authors have used data from 1.568 firms from 7 European countries between 2010 and 2016, and the models were estimated by using panel data methodology, specifically the generalized method of moments (GMM) estimation method by Arellano and Bover (1995) and Blundell and Bond (1998).FindingsOverall, the empirical results point out that the cultural moderating factors are essential in determining companies' capital structure, regardless of the country's legal origin. The study results also show that traditional variables, intrinsic to management, macroeconomic environment and religion, have a central role in capital structure, namely for the civilian countries.Originality/valueAs far as the authors know, this is the first work that uses, in addition to the traditional specific characteristics of companies, cultural dimensions and religion, as determinants of debt levels, in different legal systems for Europe.

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Section: Resultsmentioning

confidence: 99%

“…, 2015). Individualism is associated with cognitive prejudices of self-attribution, by which people tend to improve or protect their self-esteem, taking credit for success and denying any responsibility associated with failure (Haq et al. , 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

The cultural dimension in companies' leverage. New evidence using panel data for a European macroeconomic context

Neves

Almeida

Vieira

2022

CCSM

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“…The precautionary motive that aims to avoid unexpected and difficult circumstances in the future through increased cash holdings should work and be more applicable to high LTO societies, in which consideration of unexpected and difficult future circumstances and avoidance of them through thrift and saving are cultural values (Fang, 2003; Hofstede and Bond, 1988). Placing a high value on thrift discourages firms and individuals in these societies from investing in projects with high uncertainty in outcomes (Haq et al , 2018; Lievenbrück and Schmid, 2014) but encourages more savings and frugality (Hofstede, 2001; Venaik et al , 2013). Firms in high LTO societies that are more likely to value thrift and frugality for the sake of avoiding possible unexpected losses or difficulties in the future are relatively more likely to be inspired by the precautionary motive and to have higher cash holdings.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

What matters for the future? Comparing Globe's future orientation with Hofstede's long-term orientation

Alipour¹

2021

CCSM

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PurposeThis paper aims to compare the future orientation (FO) society practices dimension of the Globe model with Hofstede's long-term orientation (LTO) by testing their causal effects on three firm-level variables: cash holdings, long-term investments and acquisitions. In doing so, this research challenges the already taken-for-granted assumption in the empirical research that the two dimensions are equivalent.Design/methodology/approachHierarchical linear modeling (HLM) was used to test the hypotheses on 7,065 firms across 49 countries between 2000 and 2017.FindingsThe findings show that the causal impacts of FO society practices and LTO on a given construct are not consistent. Although LTO increases cash holdings, the impact of FO society practices on this variable is insignificant. Additionally, unlike FO society practices, which significantly increases long-term investments and acquisitions, LTO does not influence long-term investments and decreases acquisitions.Originality/valueThis study is valuable since it addresses the confusion surrounding the similarities and differences between FO society practices and LTO. Despite the dissimilarity also emphasized by Globe, Hofstede claims that they are equivalent, and the great majority of the empirical literature has assumed them to be equivalent in their analyses. Addressing this confusion, this research provides further empirical evidence that these two dimensions are dissimilar. The additional important contribution of the study is theorizing and examining the impact of FO society practices and LTO on the firm-level outcomes that reflect their temporal orientation (i.e. long-term investments and acquisitions), which is surprisingly neglected in the literature.

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“…The informal institution (National culture) consists of norms, values, customs and beliefs that direct the individuals to make decisions. There are various elements of national culture that exhibit norms, values and various ethnicities which direct the societies to establish their institutions (Haq et al , 2018). For instance, societies about individualism, such as the United States, are over-confident and over-expectant about the future (Van den Steen, 2004).…”

Section: National Culture and Corporate Financial Decisionsmentioning

confidence: 99%

A survey on national culture and corporate financial decisions: current status and future research

Kutan

Laique

Qureshi

et al. 2020

IJOEM

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PurposeThe extant literature provides substantial evidence that various facets of national culture play a significant role in corporate financial decision making. We systematically review the role of national culture on the various thematic domains of corporate financial decision making to outline what have been studies thus far and what needs to be studied.Design/methodology/approachKeywords such as national culture, organizational culture, power distance, uncertainty avoidance, masculinity, risk aversion and individualism for a search in the prominent academic literature databases are used. The studies related to the corporate financial decision making that is tied with these keywords are identified and selected for the systematic review.FindingsThe review of extant literature suggests strong evidence that national culture has a significant role in influencing corporate cash holding, corporate risk-taking, individual behaviour of the financial managers and initial public offering by the corporations. The review also indicates, although extant studies have examined the role of national culture in the key corporate financial decisions, evidence on the role of national culture in the firm's investment efficiency aspects is rather scarce. Also, what explains the role of national culture in corporate financial decision making has not been empirically exploited through causal mechanisms.Practical implicationsThe findings of the studies help advance our understanding of the current research status concerning the role played by the national culture in shaping corporate financial decisions and raise important future calls.Originality/valueTo best of our knowledge, no prior study has systematically reviewed the role of national culture in the thematic domains of corporate financial decision making.

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New Evidence on National Culture and Bank Capital Structure

Cited by 6 publications

References 32 publications

The cultural dimension in companies' leverage. New evidence using panel data for a European macroeconomic context

The cultural dimension in companies' leverage. New evidence using panel data for a European macroeconomic context

What matters for the future? Comparing Globe's future orientation with Hofstede's long-term orientation

A survey on national culture and corporate financial decisions: current status and future research

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