The Impact of National Economic Culture and Country-Level Institutional Environment on Corporate Governance Practices

We posit that national cultural practices influence the institutional environment, which in turn has an influence on corporate governance practices. We empirically evaluate these relationships using structural equation modeling. We utilize measures of national culture from Culture, Leadership, and O...

Full description

Saved in:
Bibliographic Details
Published in:Management international review 2012-06, Vol.52 (3), p.365
Main Authors: Daniel, Shirley J, Cieslewicz, Joshua K, Pourjalali, Hamid
Format: Article
Language:English
Subjects:
Accountability
Capital markets
Corporate governance
Culture
Executive compensation
Globalization
International banking
International business
Organizational behavior
Regulation
Shareholders rights
Statistical analysis
Stockholders
Strategic management
Structural equation modeling
Studies
Citations: Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We posit that national cultural practices influence the institutional environment, which in turn has an influence on corporate governance practices. We empirically evaluate these relationships using structural equation modeling. We utilize measures of national culture from Culture, Leadership, and Organizations: The Globe study of 62 Societies. For the institutional environment, we employ the World Bank Worldwide Governance Indicators. Consistent with theory, we find a strong relationship between these constructs. We further find that the institutional environment mediates the relationship between national culture and corporate governance practices. Corporate governance practices include measures of board accountability, financial disclosure and internal controls, shareholder rights, executive compensation, takeover defenses and ownership base, and corporate accountability and are available from Governance Metrics International. As both culture and institutions are linked to corporate governance practices, efforts to change corporate governance practices around the world are best informed by an appreciation of cultural as well as institutional factors. [PUBLICATION ABSTRACT]
ISSN:0938-8249
1861-8901
DOI:10.1007/s11575-011-0108-x