National Culture and Corporate Governance

Abstract

In a series of cross-country comparisons, we show that national culture is statistically significant in differentiating countries with different corporate governance systems. Using the Schwartz cultural value model and data on corporate governance systems, we analyze the impact of national culture on six dimensions of corporate governance. Countries that have stronger emphasis on the dimensions of Embeddedness, Hierarchy and Mastery are more likely to have a bank-based system, countries with a stronger emphasis on Autonomy, Egalitarianism and Harmony tend to have market-based systems. The findings suggest several implications for the ongoing debate on convergence and divergence of corporate governance systems.

Keywords: national culture, corporate governance

JEL Classification: A13, G10, G30, N20, Z13