Culture and exit mechanisms: International evidence

Mohamed Nasrallah Khiar and Maher Kooli

Global Finance Journal, 2024, vol. 61, issue C

Abstract: This study aims to examine the effect of national culture on the choice of exit mechanism for private firms. Using an international dataset of private firms covering 60 countries from 1985 to 2019, we find that private firms in countries with high uncertainty avoidance, masculinity, indulgence vs. restraint, and individualism and low power distance and long-term orientation are more inclined to exit through mergers and acquisitions. Conversely, private firms in countries with low uncertainty avoidance, masculinity, indulgence vs. restraint, and individualism and high power distance and long-term orientation are more inclined to exit through initial public offerings. Our findings are robust to control for firm and country characteristics, market conditions, funds demand, payment method, subperiods, subsamples, cultural proxies, and composite cultural profile index. Overall, our findings underscore the importance of cultural dimensions in understanding exit mechanisms for private firms.

Keywords: National culture; Initial public offerings; Mergers and acquisitions; Exit mechanisms (search for similar items in EconPapers)
JEL-codes: G15 G34 G41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:61:y:2024:i:c:s1044028324000437

DOI: 10.1016/j.gfj.2024.100971

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