 Culture and capital structure: What else to the puzzle?Vipin Mogha and Benjamin Williams International Review of Financial Analysis, 2021, vol. 73, issue C Abstract: This paper investigates four of Hofstede's cultural dimensions –individualism, masculinity, uncertainty avoidance, and long-term orientation– influence on firms' choices of short-term and long-term capital structures. Cultures influence on corporate risk-taking may drive their debt-to-equity mix based on the higher of their equity book or market value. We empirically test culture influence with a sample of 5968 firms from five industry sectors, across 33 countries, over 2009–2017. We find firms national culture influencing their choices of short-term and long-term debt to book and market value of equity. The influence is more significant on the short-term than the long-term capital structures. Furthermore, it is more significant on the short-term debt to market value of equity and on the long-term debt to book value of equity. Our robustness checks at the firm-level, country-level and sample-level confirm and reinforce our main results. These findings would provide financial analysts, investors, and creditors an in-depth understanding when comparing international firms' capital structures. Keywords: Capital structure; National culture; Risk-taking; Debt-to-equity (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:73:y:2021:i:c:s105752192030257x DOI: 10.1016/j.irfa.2020.101614 Access Statistics for this article International Review of Financial Analysis is currently edited by B.M. Lucey More articles in International Review of Financial Analysis from Elsevier |
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