Journal of Law, Finance, and Accounting > Vol 3 > Issue 2

National Culture and the Value Implication of Corporate Governance

Dale Griffin, Sauder School of Business, University of British Columbia, Canada, dale.griffin@sauder.ubc.ca Omrane Guedhami, Moore School of Business, University of South Carolina, USA, omrane.guedhami@moore.sc.edu Kai Li, Sauder School of Business, University of British Columbia, Canada, kai.li@sauder.ubc.ca Chuck C.Y. Kwok, Moore School of Business, University of South Carolina, USA, ckwok@moore.sc.edu Liang Shao, Hong Kong Baptist University, , Hong Kong, lshao@hkbu.edu.hk
 
Suggested Citation
Dale Griffin, Omrane Guedhami, Kai Li, Chuck C.Y. Kwok and Liang Shao (2018), "National Culture and the Value Implication of Corporate Governance", Journal of Law, Finance, and Accounting: Vol. 3: No. 2, pp 333-372. http://dx.doi.org/10.1561/108.00000028

Published: 21 Dec 2018
© 2018 D. Griffin, O. Guedhami, K. Li, C. C. Y. Kwok, and L. Shao
 
Subjects
Organizational behavior: international culture,  Corporate governance,  Disclosure,  Executive compensation
 
Keywords
JEL Codes: G18, G31, G32
Corporate governanceFirm valueHierarchical linear modelIndividualismNational cultureUncertainty avoidance
 

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In this article:
1. Introduction
2. Conceptual Framework and Hypothesis Development
3. A Hierarchical Linear Model
4. Variable Construction and Sample Formation
5. Main Results
6. Additional investigations
7. Conclusions
A. Variable definitions and data sources
References

Abstract

We examine why corporate governance varies widely across countries and across firms, and why such variation matters. Using a proprietary database from Governance Metrics International on corporate governance practices across a large number of countries and firms for 2006–2011 and employing a hierarchical linear model specification, we find that the national cultural dimension of individualism is positively associated, whereas the national cultural dimension of uncertainty avoidance is negatively associated, with firm-level corporate governance scores. Within countries, there is a positive association between firm-level corporate governance scores and firm value; however, across countries, the association is negative or zero.

DOI:10.1561/108.00000028