IDEAS home Printed from https://ideas.repec.org/a/kap/jbuset/v110y2012i1p45-59.html
   My bibliography  Save this article

Cultural Dimensions, Ethical Sensitivity, and Corporate Governance

Author

Listed:
  • Alex Chan
  • Hoi Cheung

Abstract

The economic globalization process has integrated different competitive markets and pushes firms in different countries to improve their managerial and operational efficiencies. Given the recent empirical evidence for the benefits to firms and stakeholders of good corporate governance (CG) practice, it is expected that good CG practice would be a common strategy for firms in different countries to meet the increasingly intense competition; however, this is not the case. This study examines the differences in CG practices in firms across different countries using the concept of ethical sensitivity. Through the regression analysis of 271 firms in 12 countries and regions, it is found that Hofstede’s cultural dimensions can explain the differences in CG practices. Furthermore, the results demonstrate the influence of culture on ethical sensitivity, which eventually determines the CG practices in different regions. Copyright The Author(s) 2012

Suggested Citation

  • Alex Chan & Hoi Cheung, 2012. "Cultural Dimensions, Ethical Sensitivity, and Corporate Governance," Journal of Business Ethics, Springer, vol. 110(1), pages 45-59, September.
    • Handle: RePEc:kap:jbuset:v:110:y:2012:i:1:p:45-59
    DOI: 10.1007/s10551-011-1146-9
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10551-011-1146-9
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10551-011-1146-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Klapper, Leora F. & Love, Inessa, 2004. "Corporate governance, investor protection, and performance in emerging markets," Journal of Corporate Finance, Elsevier, vol. 10(5), pages 703-728, November.
    2. De Nicolò, Gianni & Laeven, Luc & Ueda, Kenichi, 2008. "Corporate governance quality: Trends and real effects," Journal of Financial Intermediation, Elsevier, vol. 17(2), pages 198-228, April.
    3. Doidge, Craig & Andrew Karolyi, G. & Stulz, Rene M., 2007. "Why do countries matter so much for corporate governance?," Journal of Financial Economics, Elsevier, vol. 86(1), pages 1-39, October.
    4. Franke, George R. & Nadler, S. Scott, 2008. "Culture, economic development, and national ethical attitudes," Journal of Business Research, Elsevier, vol. 61(3), pages 254-264, March.
    5. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    6. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance and Equity Prices," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 107-156.
    7. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    8. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    9. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    10. Art Durnev & E. Han Kim, 2005. "To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation," Journal of Finance, American Finance Association, vol. 60(3), pages 1461-1493, June.
    11. World Bank, 2006. "World Development Indicators 2006," World Bank Publications - Books, The World Bank Group, number 8151, December.
    12. Cohen, Jeffrey R. & Pant, Laurie W. & Sharp, David J., 1996. "A methodological note on cross-cultural accounting ethics research," The International Journal of Accounting, Elsevier, vol. 31(1), pages 55-66.
    13. Mario Fernando & Rafi Chowdhury, 2010. "The Relationship Between Spiritual Well-Being and Ethical Orientations in Decision Making: An Empirical Study with Business Executives in Australia," Journal of Business Ethics, Springer, vol. 95(2), pages 211-225, August.
    14. Luca Enriques & Paolo Volpin, 2007. "Corporate Governance Reforms in Continental Europe," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 117-140, Winter.
    15. Tarun Khanna & Joe Kogan & Krishna Palepu, 2006. "Globalization and Similarities in Corporate Governance: A Cross-Country Analysis," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 69-90, February.
    16. Michael S. Rozeff, 1982. "Growth, Beta And Agency Costs As Determinants Of Dividend Payout Ratios," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 5(3), pages 249-259, September.
    17. Urbi Garay & Maximiliano González, 2008. "Corporate Governance and Firm Value: The Case of Venezuela," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(3), pages 194-209, May.
    18. Black, Bernard S. & Jang, Hasung & Kim, Woochan, 2006. "Predicting firms' corporate governance choices: Evidence from Korea," Journal of Corporate Finance, Elsevier, vol. 12(3), pages 660-691, June.
    19. Easterbrook, Frank H, 1984. "Two Agency-Cost Explanations of Dividends," American Economic Review, American Economic Association, vol. 74(4), pages 650-659, September.
    20. Ronald C. Anderson & David M. Reeb, 2003. "Founding-Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1327, June.
    21. Ingrid Bonn & Josie Fisher, 2005. "Corporate Governance and Business Ethics: insights from the strategic planning experience," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(6), pages 730-738, November.
    22. Ronald C. Anderson & David M. Reeb, 2003. "Founding‐Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1328, June.
    23. Bernard S. Black & Hasung Jang & Woochan Kim, 2006. "Does Corporate Governance Predict Firms' Market Values? Evidence from Korea," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 22(2), pages 366-413, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Avinash Ghalke & Arunima Haldar & Satish Kumar, 2023. "Family firm ownership and its impact on performance: evidence from an emerging market," Review of Managerial Science, Springer, vol. 17(2), pages 493-512, February.
    2. Nguyen, Thi Tuyet Mai, 2017. "An examination of independent directors in Vietnam," OSF Preprints ay6dv, Center for Open Science.
    3. Francisco J. López‐Arceiz & Cristina Del Río & Ana J. Bellostas, 2020. "Sustainability performance indicators: Definition, interaction, and influence of contextual characteristics," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2615-2630, November.
    4. Devjani Chatterjee, 2014. "Management Control Systems and Hofstede’s Cultural Dimensions: An Empirical Study of Innovators and Low Innovators," Global Business Review, International Management Institute, vol. 15(3), pages 565-582, September.
    5. Weichieh Su & Mike W. Peng & Weiqiang Tan & Yan-Leung Cheung, 2016. "The Signaling Effect of Corporate Social Responsibility in Emerging Economies," Journal of Business Ethics, Springer, vol. 134(3), pages 479-491, March.
    6. Yasemin Zengin Karaibrahimoglu & Burcu Guneri Cangarli, 2016. "Do Auditing and Reporting Standards Affect Firms’ Ethical Behaviours? The Moderating Role of National Culture," Journal of Business Ethics, Springer, vol. 139(1), pages 55-75, November.
    7. Amina Asabe Adamu & Chong Yen Wan & Abdullahi Hassan Gorondutse, 2020. "Ethical Sensitivity and Sustainable Performance of SMEs: Empirical Evidence from Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(8), pages 78-82, August.
    8. Chien-Chi Chu & Kung-Cheng Ho & Chia-Chun Lo & Andreas Karathanasopoulos & I-Ming Jiang, 2019. "Information disclosure, transparency ranking system and firms’ value deviation: evidence from Taiwan," Review of Quantitative Finance and Accounting, Springer, vol. 53(3), pages 721-747, October.
    9. Carlos Sanchez-Runde & Luciara Nardon & Richard Steers, 2013. "The Cultural Roots of Ethical Conflicts in Global Business," Journal of Business Ethics, Springer, vol. 116(4), pages 689-701, September.
    10. Cristina Bota-Avram & Roumen Vesselinov & Paula Ramona Răchişan & Adrian Groşanu, 2022. "Determinant factors on ethical behavior of firms: evidence from a cross-country survey," SN Business & Economics, Springer, vol. 2(8), pages 1-25, August.
    11. Ibrahim Khalifa Elmghaamez, 2021. "Reasons behind the worldwide diversity in identity and issuance of good governance codes," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(2), pages 136-152, June.
    12. Francisco José López-Arceiz & Ana José Bellostas-Pérezgrueso & José Mariano Moneva, 2018. "Evaluation of the Cultural Environment’s Impact on the Performance of the Socially Responsible Investment Funds," Journal of Business Ethics, Springer, vol. 150(1), pages 259-278, June.
    13. Ali, Amjad & Alim, Wajid & Ahmed, Jawad & Nisar, Sabahat, 2021. "Impact of Corporate Governance on Performance: A Study of Listed Firms in Pakistan," MPRA Paper 111299, University Library of Munich, Germany.
    14. Rothonis, Stephanie & Tran, Duy & Wu, Eliza, 2016. "Does national culture affect the intensity of volatility linkages in international equity markets?," Research in International Business and Finance, Elsevier, vol. 36(C), pages 85-95.
    15. Amjad Ali & Wajid Alim & Jawad Ahmed & Sabahat Nisar, 2022. "Yoke of corporate governance and firm performance: A study of listed firms in Pakistan," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 13(1), pages 08-17, January.
    16. Debora Gottardello & Maria del Mar Pàmies, 2019. "Business School Professors’ Perception of Ethics in Education in Europe," Sustainability, MDPI, vol. 11(3), pages 1-19, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.
    2. Connelly, J. Thomas & Limpaphayom, Piman & Nagarajan, Nandu J., 2012. "Form versus substance: The effect of ownership structure and corporate governance on firm value in Thailand," Journal of Banking & Finance, Elsevier, vol. 36(6), pages 1722-1743.
    3. Oded Cohen, 2020. "Firm-level and Country-level Corporate Governance: Does One Substitute or Complement the Other?," Bank of Israel Working Papers 2020.08, Bank of Israel.
    4. Oded Cohen, 2020. "Measuring Corporate Governance Quality in Concentrated-Ownership Firms," Bank of Israel Working Papers 2020.06, Bank of Israel.
    5. Nasha Ananchotikul & Roy Kouwenberg & Visit Phunnarungsi, 2010. "Do Firms Decouple Corporate Governance Policy and Practice?," European Financial Management, European Financial Management Association, vol. 16(5), pages 712-737, November.
    6. Carvalhal, Andre, 2012. "Do shareholder agreements affect market valuation?," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 919-933.
    7. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, June.
    8. Laeven, Luc & Chhaochharia, Vidhi, 2007. "The Invisible Hand in Corporate Governance," CEPR Discussion Papers 6256, C.E.P.R. Discussion Papers.
    9. Ammann, Manuel & Oesch, David & Schmid, Markus M., 2011. "Corporate governance and firm value: International evidence," Journal of Empirical Finance, Elsevier, vol. 18(1), pages 36-55, January.
    10. Premepeh, kwadwo Boateng & Odartei-Mills, Eugene, 2015. "Corporate governance structure and shareholder wealth maximisation," MPRA Paper 68087, University Library of Munich, Germany.
    11. Black, Bernard S. & de Carvalho, Antonio Gledson & Gorga, Érica, 2012. "What matters and for which firms for corporate governance in emerging markets? Evidence from Brazil (and other BRIK countries)," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 934-952.
    12. Manuel Ammann & David Oesch & Markus Schmid, 2013. "The construction and valuation effect of corporate governance indices," Chapters, in: Adrian R. Bell & Chris Brooks & Marcel Prokopczuk (ed.), Handbook of Research Methods and Applications in Empirical Finance, chapter 13, pages 314-340, Edward Elgar Publishing.
    13. Enikolopov, Ruben & Petrova, Maria & Stepanov, Sergey, 2014. "Firm value in crisis: Effects of firm-level transparency and country-level institutions," Journal of Banking & Finance, Elsevier, vol. 46(C), pages 72-84.
    14. Erwan Morellec & Boris Nikolov & Norman Schürhoff, 2018. "Agency Conflicts around the World," Review of Financial Studies, Society for Financial Studies, vol. 31(11), pages 4232-4287.
    15. Barbara, Petracci, 2011. "Trading when you cannot trade: Blackout periods in Italian firms," International Review of Law and Economics, Elsevier, vol. 31(3), pages 196-204, September.
    16. Anderson, Anne & Gupta, Parveen P., 2009. "A cross-country comparison of corporate governance and firm performance: Do financial structure and the legal system matter?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 5(2), pages 61-79.
    17. James, Hui & Benson, Bradley W. & Wu, Chen (Ken), 2017. "Does CEO ownership affect payout policy? Evidence from using CEO scaled wealth-performance sensitivity," The Quarterly Review of Economics and Finance, Elsevier, vol. 65(C), pages 328-345.
    18. Bruno, Valentina & Claessens, Stijn, 2010. "Corporate governance and regulation: Can there be too much of a good thing?," Journal of Financial Intermediation, Elsevier, vol. 19(4), pages 461-482, October.
    19. Ntim, collins g & Opong, kwaku k & Danbolt, jo, 2010. "Corporate governance, affirmative action and firm value: evidence from post-apartheid South African firms," MPRA Paper 32297, University Library of Munich, Germany, revised 04 Aug 2011.
    20. Paul McGuinness & Kevin Lam & João Vieito, 2015. "Gender and other major board characteristics in China: Explaining corporate dividend policy and governance," Asia Pacific Journal of Management, Springer, vol. 32(4), pages 989-1038, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jbuset:v:110:y:2012:i:1:p:45-59. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.