National Culture and Private Benefits of Control

Abstract

Our paper examines the relationship between national culture and private benefits of control. We concentrate on the Hofstede dimensions and analyze their role for a comprehensive range of instruments that directly relate to the private benefits of control. In this sense, our paper complements previous literature by looking at the relationship between culture and private benefits of control in a more straightforward fashion considering also the psychic value of being in control. In a cross-country analysis of 36 countries, we show that power distance relates positively to the expropriation of private benefits of control, whereas individualism exhibits a negative relationship. Our results are statistically significant and robust to a range of alternative specifications.

Keywords: Private benefits of control, national culture, corporate governance, power distance, individualism

JEL Classification: F30, G15, G34, Z10