Culture and Corporate Governance: The Influence of Language and Religion in Switzerland
Management International Review, DOI: 10.1007/s11575-014-0216-5, Forthcoming
36 Pages Posted: 28 Aug 2013 Last revised: 13 Sep 2014
Date Written: September 12, 2014
Abstract
We investigate the effect of culture on corporate governance using the extraordinary opportunity that the corporate landscape of Switzerland provides. Within a single institutional framework (e.g., Swiss federal corporate law), we use language (German and French) and religion (Roman Catholicism and Protestantism) as proxies for culture. These groups share a distinct set of values particularly in their tolerance for hierarchical structures. We observe that firms in Swiss-French areas and firms in Roman Catholic cantons are more likely to have one-tier boards, whereas two-tier boards are more prevalent in Swiss-German areas and Protestant cantons. Furthermore, board composition is significantly driven by language. In contrast, ownership and equity structure are not significantly related to culture.
Keywords: Corporate Governance, Board of Directors, Ownership Structure, Culture, Language, Religion
JEL Classification: G30, G32, G34, G38, Z10
Suggested Citation: Suggested Citation