National Culture and International Differences in the Cost of Equity Capital

Sidney John Gray (), Tony Kang and Yong Keun Yoo
Additional contact information
Sidney John Gray: University of Sydney
Tony Kang: Spears School of Business Oklahoma State University
Yong Keun Yoo: Korea University Business School

Management International Review, 2013, vol. 53, issue 6, No 6, 899-916

Abstract: Abstract Prior literature suggests that national culture influences many facets of business operations including corporate governance, capital structure, managerial compensation, foreign direct investment behavior and accounting systems. Extending this line of literature, we examine whether key aspects of national culture are also related to international differences in the cost of equity capital. In a cross-country sample of 32 countries during 1992–2006, we find that the cost of equity capital tends to be higher in more individualistic and less uncertainty avoiding societies consistent with their greater risk-taking orientation. This finding contributes to the international business and financial literature by identifying national culture as an important institutional variable influencing firms’ cost of equity capital around the world.

Keywords: National culture; Cost of equity capital; Individualism; Uncertainty avoidance; Risk-taking (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://link.springer.com/10.1007/s11575-013-0182-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:manint:v:53:y:2013:i:6:d:10.1007_s11575-013-0182-3

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/11575

DOI: 10.1007/s11575-013-0182-3

Access Statistics for this article

Management International Review is currently edited by Michael-Jörg Oesterle and Joachim Wolf

More articles in Management International Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().