Culture, Marketization, and Owner-Manager Agency Costs: A Case of Merchant Guild Culture in China

Xingqiang Du (), Jianying Weng (), Quan Zeng () and Hongmei Pei ()
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Xingqiang Du: Xiamen University
Jianying Weng: Xiamen Ocean Vocational College
Quan Zeng: Xiamen University
Hongmei Pei: Xiamen University

Journal of Business Ethics, 2017, vol. 143, issue 2, No 9, 353-386

Abstract: Abstract This study explores cultural influence on corporate behavior employing the case of merchant guild culture in China and further the moderating role of Marketization. Using hand-collected data on merchant guild culture, we find that merchant guild culture is significantly negatively associated with owner-manager agency costs, suggesting that merchant guild culture in ancient China still has its continuous and remarkable effects on managerial behavior in contemporary corporations. This finding also implies that merchant guild culture motivates managers to upgrade the efficiency of controlling operating costs, reduces agency conflicts between management and shareholders, and eventually mitigates owner-manager agency costs. Moreover, provincial Marketization level attenuates the negative association between merchant guild culture and owner-manager agency costs. Above results are robust to a variety of alternative measures of merchant guild culture and owner-manager agency costs. Furthermore, our findings are still valid after controlling for the potential endogeneity between merchant guild culture and owner-manager agency costs.

Keywords: Merchant guild culture; Marketization; Owner-manager agency costs; Expense ratio; Asset utilization ratio; China (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (19)

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DOI: 10.1007/s10551-015-2765-3

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