Social Environment and Healthy Investment Behavior: Joint Influence of Culture and Institution on China

Dongao Li and Songdong Shen
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Dongao Li: Business School, Jilin University, Changchun 130012, China
Songdong Shen: Business School, Jilin University, Changchun 130012, China

IJERPH, 2022, vol. 19, issue 1, 1-17

Abstract: The influence of the social environment on healthy investment behavior is a vital research topic. This paper focuses on foreign direct investment (FDI) as an important part of its broad impact in improving the level of capital circulation and diversifying the non-systemic risk of a single country portfolio. Using data from 35 countries on direct investment in China, we find that the impact of the social environment on healthy investment behavior is mainly reflected in investors’ resistance to cultural distance and their benefit compensation across institutional distance. In addition, their joint influence is still negative, dominated by cultural distance, which can still verify that institutional distance mitigates the negative effect of cultural distance on FDI. Therefore, in order to promote international healthy investment behavior, it is feasible to improve both the mitigation effect of the institution in the short term and promote the level of cultural exchange in the long term, according to the research results of this paper.

Keywords: social environment; healthy investment behavior; cultural distance; institutional distance (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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