Does culture influence asset managers’ views and behavior?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This research enters new ground by presenting comparative survey evidence on asset managers' views and behavior in the United States, Germany, Japan and Thailand. Relying on Hofstede's four cultural dimensions, we find that cultural differences are most helpful in understanding country differences which cannot be explained by pure economic reasoning. In short, controlling for various determinants, the dimension of more Individualism predicts less herding behavior, more Power Distance leads to older and comparatively less experienced managers in the upper hierarchy, Masculinity brings men into top positions and to higher volumes of assets under personal responsibility, and Uncertainty Avoidance is related to higher safety margins against the tracking error allowed and relatively more research effort. These consequences, i.e. the culturally different importance of herding, age, experience, gender, tracking error and research effort, clearly affect investment behavior, although in a complex way. JEL-Classification: G 23, G 14, G15, Z10 We do indeed find asset management to be a global business that shows some common global aspects like e.g. strong reliance on fundamental data and related strategies. However, we also find country-specific differences that can hardly be explained by capital market theory but that are consistent with a cultural influence on views and behavior instead. Terms of use: Documents in EconStor mayDefining "culture" has been of scientific interest for centuries (for a critical review, see Kroeber and Kluckhohn, 1952). We rely on the comprehensive, empirically based understanding by Hofstede (1980). He defines culture as collective programming of the mind which is primarily manifested in values and norms, but also more superficially visible in rituals and symbols. This so-called mental programming -also referred to as "software of the mind" -is stable over time and implies the same person showing consistently similar behavior in similar situations. When talking about culture, Hofstede refers to national culture.There have been several research streams in cultural theory in the past decades and cross-cultural research as a multidisciplinary approach ranges from cognitive and social psychology, sociology, anthropology and history, up to management 3 science and economics. This broad and vivid field of research encompasses a variety of approaches and frameworks for cross-cultural analyses. 2In order to examine and compare the viewpoints an...

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