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Does national culture affect international corporate cash holdings?

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  • Chang, Kiyoung
  • Noorbakhsh, Abbas

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.

Suggested Citation

  • Chang, Kiyoung & Noorbakhsh, Abbas, 2009. "Does national culture affect international corporate cash holdings?," Journal of Multinational Financial Management, Elsevier, vol. 19(5), pages 323-342, December.
  • Handle: RePEc:eee:mulfin:v:19:y:2009:i:5:p:323-342
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Fidrmuc, Jana P. & Jacob, Marcus, 2010. "Culture, agency costs, and dividends," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 321-339, September.
    2. repec:bof:bofrdp:urn:nbn:fi:bof-201508181353 is not listed on IDEAS
    3. Manthos D. Delis & Chrysovalantis Gaganis & Iftekhar Hasan & Fotios Pasiouras, 2017. "The Effect of Board Directors from Countries with Different Genetic Diversity Levels on Corporate Performance," Management Science, INFORMS, pages 231-249.
    4. repec:spr:manint:v:54:y:2014:i:3:d:10.1007_s11575-014-0201-z is not listed on IDEAS
    5. Jakob, Keith & Nam, Yoonsoo, 2017. "Do cultures influence abnormal market reactions before official sovereign debt rating downgrade announcements?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 47(C), pages 65-75.
    6. : Jana P. Fidrmuc & Marcus Jacob, 2010. "Culture, Agency Costs and Dividends," Working Papers wpn10-01, Warwick Business School, Finance Group.
    7. Huong Dang, 2014. "How dimensions of national culture and institutional characteristics influence sovereign rating migration dynamics," ZenTra Working Papers in Transnational Studies 42 / 2014, ZenTra - Center for Transnational Studies.
    8. 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.
    9. Costa, Bruce A. & Crawford, Anthony & Jakob, Keith, 2013. "Does culture influence IPO underpricing?," Journal of Multinational Financial Management, Elsevier, pages 113-123.
    10. Orens, Raf & Reheul, Anne-Mie, 2013. "Do CEO demographics explain cash holdings in SMEs?," European Management Journal, Elsevier, vol. 31(6), pages 549-563.

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