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Does national culture affect international corporate cash holdings?

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  • Chang, Kiyoung
  • Noorbakhsh, Abbas
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    Abstract

    The current literature frequently examines the effects of shareholder rights protection on corporate cash holdings in the context of agency theory. In this study, we show that national culture influences corporate managers' cash holding behavior beyond the effects of corporate governance and financial market developments in each country through the perception of agency costs and value of financial flexibility. Using Hofstede's cultural dimension indices, we find that corporations hold larger cash and liquid balances in countries where the people tend to avoid uncertainty more, are culturally more masculine, and have longer term orientation.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Multinational Financial Management.

    Volume (Year): 19 (2009)
    Issue (Month): 5 (December)
    Pages: 323-342

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    Handle: RePEc:eee:mulfin:v:19:y:2009:i:5:p:323-342

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    Web page: http://www.elsevier.com/locate/mulfin

    Related research

    Keywords: Cash holdings Culture Corporate governance;

    References

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    Cited by:
    1. Orens, Raf & Reheul, Anne-Mie, 2011. "Do CEO Demographics Explain Cash Holdings in SMEs?," Working Papers 2011/35, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    2. Fidrmuc, Jana P. & Jacob, Marcus, 2010. "Culture, agency costs, and dividends," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 321-339, September.
    3. Costa, Bruce A. & Crawford, Anthony & Jakob, Keith, 2013. "Does culture influence IPO underpricing?," Journal of Multinational Financial Management, Elsevier, vol. 23(1), pages 113-123.
    4. : Jana P. Fidrmuc & Marcus Jacob, 2010. "Culture, Agency Costs and Dividends," Working Papers wpn10-01, Warwick Business School, Finance Group.

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