National culture and corporate risk-taking around the world

B Frijns; F Hubers; D Kim; TY Roh; YH Xu

doi:10.1016/j.gfj.2022.100710

National culture and corporate risk-taking around the world

B Frijns^*, F Hubers, D Kim, TY Roh, YH Xu

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

This paper examines the effect of national culture on corporate risk-taking worldwide. Specifically, we focus on one particular cultural trait – Individualism – a culture dimension linked to risk-taking and overconfidence. Using a sample of 48 countries from 1998 to 2019 (a total of 111,697 firm-year observations), we document a positive relationship between Individualism and corporate risk-taking. This result is robust to potential endogeneity concerns, alternative default horizons, an alternative measure for corporate risk-taking, and alternative measures of Individualism.

Original language	English
Article number	100710
Number of pages	11
Journal	Global Finance Journal
Volume	52
Issue number	May 2022
DOIs	https://doi.org/10.1016/j.gfj.2022.100710
Publication status	Published - May 2022

Keywords

Corporate risk-taking
Individualism
National culture

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10.1016/j.gfj.2022.100710Licence: CC BY

Cite this

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title = "National culture and corporate risk-taking around the world",

abstract = "This paper examines the effect of national culture on corporate risk-taking worldwide. Specifically, we focus on one particular cultural trait – Individualism – a culture dimension linked to risk-taking and overconfidence. Using a sample of 48 countries from 1998 to 2019 (a total of 111,697 firm-year observations), we document a positive relationship between Individualism and corporate risk-taking. This result is robust to potential endogeneity concerns, alternative default horizons, an alternative measure for corporate risk-taking, and alternative measures of Individualism.",

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AB - This paper examines the effect of national culture on corporate risk-taking worldwide. Specifically, we focus on one particular cultural trait – Individualism – a culture dimension linked to risk-taking and overconfidence. Using a sample of 48 countries from 1998 to 2019 (a total of 111,697 firm-year observations), we document a positive relationship between Individualism and corporate risk-taking. This result is robust to potential endogeneity concerns, alternative default horizons, an alternative measure for corporate risk-taking, and alternative measures of Individualism.

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National culture and corporate risk-taking around the world

Abstract

Keywords

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