Abstract

http://ssrn.com/abstract=899082
 
 

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Egalitarianism and International Investment


Jordan I. Siegel


Harvard Business School

Amir N. Licht


Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law; European Corporate Governance Institute (ECGI)

Shalom H. Schwartz


Hebrew University of Jerusalem - Department of Psychology; National Research University Higher School of Economics

November 4, 2010


Abstract:     
This study identifies how country differences on a key cultural dimension - egalitarianism - influence the direction of different types of international investment flows. A society's cultural orientation towards egalitarianism is manifested by intolerance for abuses of market and political power and a desire for protecting the weak and less powerful actors. We show egalitarianism to be based on exogenous factors including social fractionalization, dominant religion circa 1900, and war experience from the 19th century era of state formation. Controlling for a large set of competing explanations, we find a robust influence of egalitarianism distance on cross-national investment flows of bond and equity issuances, syndicated loans, and mergers and acquisitions. An informal cultural institution largely determined a century or more ago, egalitarianism exercises its effect on international investment via an associated set of consistent contemporary policy choices. But even after controlling for these associated policy choices, egalitarianism continues to exercise a direct effect on cross-border investment flows, likely through its direct influence on managers’ daily business conduct.

Number of Pages in PDF File: 41

Keywords: culture, informal institutions, social institutions, egalitarianism, cultural distance

JEL Classification: F21, F23, G32, G34, K22, K4, Z13

working papers series


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Date posted: May 1, 2006 ; Last revised: November 10, 2010

Suggested Citation

Siegel, Jordan I. and Licht, Amir N. and Schwartz, Shalom H., Egalitarianism and International Investment (November 4, 2010). Available at SSRN: http://ssrn.com/abstract=899082 or http://dx.doi.org/10.2139/ssrn.899082

Contact Information

Jordan I. Siegel (Contact Author)
Harvard Business School ( email )
Morgan Hall 231
Soldiers Field
Boston, MA 02163
United States
617-495-6303 (Phone)
617-496-5859 (Fax)
Amir N. Licht
Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law ( email )
P.O. Box 167
Herzliya, 46150
Israel
972-9-952-7332 (Phone)
952-9-9513323 (Fax)
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
952-9-9513323 (Fax)
HOME PAGE: http:/www.ecgi.org
Shalom H. Schwartz
Hebrew University of Jerusalem - Department of Psychology ( email )
National Research University Higher School of Economics ( email )
Myasnitskaya street, 20
Moscow, RI Moscow 119017
Russia
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