National Culture and the Value Implication of Corporate Governance

74 Pages Posted: 24 Feb 2014 Last revised: 19 Dec 2017

See all articles by Dale W. Griffin

Dale W. Griffin

University of British Columbia (UBC) - Division of Marketing

Omrane Guedhami

University of South Carolina - Moore School of Business

Chuck C.Y. Kwok

University of South Carolina - Darla Moore School of Business

Kai Li

University of British Columbia (UBC) - Sauder School of Business; Asian Bureau of Finance and Economic Research (ABFER); China Academy of Financial Research (CAFR); European Corporate Governance Institute (ECGI); Canadian Sustainable Finance Network (CSFN)

Liang Shao

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences

Date Written: December 18, 2017

Abstract

We examine why corporate governance varies widely across countries and across firms, and why such variation matters. Using a proprietary database from Governance Metrics International on corporate governance practices across a large number of countries and firms for 2006-2011 and employing a hierarchical linear model specification, we find that the national cultural dimension of individualism is positively associated with, whereas the national cultural dimension of uncertainty avoidance is negatively associated with, firm-level corporate governance scores. Within countries, there is a positive association between firm-level corporate governance scores and firm value; however, across countries, the association is negative or zero.

Keywords: corporate governance; firm value; hierarchical linear model; individualism; national culture; uncertainty avoidance

JEL Classification: G18, G31, G32

Suggested Citation

Griffin, Dale W. and Guedhami, Omrane and Kwok, Chuck C.Y. and Li, Kai and Shao, Liang, National Culture and the Value Implication of Corporate Governance (December 18, 2017). Available at SSRN: https://ssrn.com/abstract=2400078 or http://dx.doi.org/10.2139/ssrn.2400078

Dale W. Griffin

University of British Columbia (UBC) - Division of Marketing ( email )

Canada

Omrane Guedhami

University of South Carolina - Moore School of Business ( email )

Columbia, SC
United States

Chuck C.Y. Kwok

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-777-3606 (Phone)
803-777-3609 (Fax)

Kai Li (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8353 (Phone)
604-822-4695 (Fax)

HOME PAGE: http://finance.sauder.ubc.ca/~kaili

Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Canadian Sustainable Finance Network (CSFN) ( email )

Queens University
Kingston, ON
Canada

HOME PAGE: http://https://smith.queensu.ca/centres/isf/research/network.php

Liang Shao

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences ( email )

Hong Kong

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