Do National Cultures Moderate the Relationship Between Corporate Governance Mechanisms and Financial Performance?

Camelia Iuliana Lungu () and Andreea Madalina Bojan ()
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Camelia Iuliana Lungu: Bucharest University of Economic Studies, Department of Accounting and Audit
Andreea Madalina Bojan: Bucharest University of Economic Studies, Doctoral School of Accounting

Chapter Chapter 7 in Contemporary Challenges in Finance and Accounting: Insights into Markets, Reporting and Sustainability, 2026, pp 135-162 from Springer

Abstract: Abstract The aim of this research is to contribute to the understanding of how national culture’s dimensions associated with agency theory, transparency, and information asymmetry moderate the impact of various corporate governance mechanisms on company’s financial performance. A mixed dataset collected at company and country level is statistically analysed. Multilevel robust regressions with random intercept modelling, controlling for year, industry, and country fixed effects are used to validate the research hypotheses. The moderating effect of Hofstede’s culture’s dimensions related to agency and stakeholders’ theories are interconnected with legitimacy theory. The analysed period is 2020–2022, a time of multiple constraints generated by the pandemic crisis, that may act as a stress factor with impact on managers’ financial decisions. Results suggest that the impact of various corporate governance mechanisms on financial performance may depend on the national culture’s characteristics. Specifically, the relationship is found stronger in countries with a higher power distance, oriented towards individualism, and low uncertainty avoidance. These results have important academic and business implications. Academics may identify gaps to be addressed in their future research, while managers may adjust their decisions-making scenarios when dealing with heterogeneous stakeholders’ demands across countries.

Keywords: Corporate governance mechanisms; Financial performance; Hofstede’s dimensions of national culture; Agency theory; Stakeholder theory; Legitimacy theory (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-032-20143-0_7

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DOI: 10.1007/978-3-032-20143-0_7

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