The Effect of National Culture on Corporate Financial Decisions

Çetenak, Emin Hüseyin; Cingöz, Ayşe; Acar, Elif

doi:10.1007/978-3-319-47172-3_24

Cited by 7 publications

(20 citation statements)

References 19 publications

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“…This is supported by Newman & Nollen (1996) who state that people bring their national culture anywhere including the workplace. In addition, culture does not only influence behaviour but also institutional applications, policies and norms including corporate decision making (Çetenak, Cingoz & Acar, 2017). Thus, this research will be based on an organisational level of culture deriving from the national culture.…”

Section: Definitions Of National Culturementioning

confidence: 99%

“…In conclusion, despite the criticism of Hofstede's model, it is the most suitable cultural dimension model for the scope of this research. This is due to the fact that the model is a seminal work in the field and still one of the most often used means to measure and compare cultures in business studies (Beugelsdijk et al, 2017;Çetenak et al, 2017;Chui & Kwok, 2008;Hsu et al, 2013;Minkov & Hofstede, 2011;Tung & Verbeke, 2010). The main reason for this popularity is the fact that the model is very comprehensive and incorporates different properties of other cultural dimension models (c.f.…”

Section: Measurements Of National Culturementioning

confidence: 99%

“…Despite the hard nature of financial decisions, weighting up benefits and costs, soft factors such as the cultural background of the decisionmaker also have an impact on financial decisions (Chen, Dou, Rhee, Truong, & Veeraraghavan, 2015;Çetenak et al, 2017;Kumar & Rao, 2015;Kurtz, 2003;Kutan, Laique, Qureshi, Rehman & Shahzad, 2020). "Executives' financial decisions show variance from society to society as a result of their cultural differences" (Çetenak et al, 2017, p. 355).…”

Section: Cultural Impact On Corporate Financial Decisionsmentioning

confidence: 99%

See 2 more Smart Citations

Mind the gap: public equity as a financing solution for medium-sized enterprises and the influence of national culture

Koch

Crossan²,

Jaworski³

2022

IJEBR

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PurposeThis research focuses on the demand from medium-sized firms to access public equity as a source of finance. The acceptance of public equity differs strongly between countries, particularly between the United Kingdom and Germany. Therefore, this research aims to identify the impact of national culture on the decision to go public in these two countries.Design/methodology/approachThe theoretical framework builds on the satisficing theory of rationality, the pecking-order theory as well as Hofstede's cultural dimension theory. Using a questionnaire, over 1,000 medium-sized businesses in the United Kingdom and Germany were surveyed.FindingsThe findings demonstrate that British medium-sized firms are more open to using public equity as a source of finance than their German counterparts. The results indicate that national culture not only affects the decision to go public but also has a negative impact on uncertainty avoidance and long-term orientation.Originality/valueThe originality of the research lies in the focus on medium-sized firms and the effects of cultural differences between the United Kingdom and Germany. No previous research has explored how culture influences the decision to go public using a dataset generated from medium-sized firms in the United Kingdom and Germany.

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Section: Definitions Of National Culturementioning

confidence: 99%

Section: Measurements Of National Culturementioning

confidence: 99%

Section: Cultural Impact On Corporate Financial Decisionsmentioning

confidence: 99%

See 1 more Smart Citation

Mind the gap: public equity as a financing solution for medium-sized enterprises and the influence of national culture

Koch

Crossan²,

Jaworski³

2022

IJEBR

View full text Add to dashboard Cite

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“…Technically, the econometric model in this study is also termed as a linear regression model, which was developed to examine capital structure (LEV). The study adopted DA (Cetenak, Cingoz, & Acar, 2017;Daud, Norwani, Mansor, & Endut, 2016); and DE (Chaleeda et al, 2019;Hadi et al, 2018) as dependent variables and described LEV to proxy the capital structure. The linear regression function hypothesized that the dependent variables LEV are linearly related to the independent variables.…”

Section: Research Frameworkmentioning

confidence: 99%

“…The control variables in this study are Board Size (BODSIZ) and Foreign Non-Executive Independent Director (FOINED). For instance, regression function hypothesized capital structure measure as DA on national culture (Cetenak et al, 2017); on a firm's performance (Daud et al, 2016). Capital structure also measures as DE on the firm's value (Chaleeda et al, 2019); and on Shariah Compliance (Hadi et al, 2018).…”

Section: Research Frameworkmentioning

confidence: 99%

Capital Structure and Culture in Malaysia: A Study From Ethnicity and Religion Perspectives

Ooi

Chu

2020

IJIM

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Conceptualization from New Institutional Economics of Williamson (2000), the study looked at the issue of formal and informal institutional factors on financial decision making. This study first investigated the informal embedded culture such as “ethnicity and religion” that could influence the decision in a firm's capital structure. Secondly, the influence of culture informal institutions such as “Shariah and Non-Shariah compliant firms on capital structure decisions was investigated. Previous observations showed Chinese have high individualism and low uncertainty avoidance. Whereas, the Malay has low individualism and high uncertainty. These dimensions affect firm’s decision behaviour towards capital structure decision. This study aimed to confirm whether culture could explain trade-off and pecking order theory of capital structure decision. The study adopted a New Institutional Economics framework to understand how cultural divergence rationality interferes on caporal structure decision, where traditional finance only emphasises on economic responsibility that strives resources maximization. The study applied a longitudinal approach, where 187 sample firms of data covering a sample period from 2015 to 2019. The firms consisted of Bursa 90 best corporate governance firms awarded by Minority Shareholders Watch Group (MSWG) in 2017 and 2018; also randomly selected 97 PLCs of non-winner firms where both panels data balance in term of Board independence and Number of Shariah Compliance PLCs. A secondary data collection approach was adopted to obtain the CEO’s ethnicity and religion. Data from the extract of an annual report and Shariah-compliant list were adopted. This study made significant contributions to explain the relationships of informal (culture as ethnicity and religion) on capital structure; formal institution (policies as firm’s shariah compliance) on capital structure decision.

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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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The Effect of National Culture on Corporate Financial Decisions

Cited by 7 publications

References 19 publications

Mind the gap: public equity as a financing solution for medium-sized enterprises and the influence of national culture

Mind the gap: public equity as a financing solution for medium-sized enterprises and the influence of national culture

Capital Structure and Culture in Malaysia: A Study From Ethnicity and Religion Perspectives

Corporate social responsibility and capital structure: Moderating effect of culture

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