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Managers' cultural origin and corporate response to an economic shock

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  • Bedendo, Mascia
  • Garcia-Appendini, Emilia
  • Siming, Linus

Abstract

We exploit the exogenous Covid-19 shock in a bicultural area of Italy to identify cultural differences in the way companies respond to economic shocks. Firms with managers of diverse cultural backgrounds resort to different forms of government aid, diverge in their investment decisions, and have different growth rates. These findings are consistent with cultural differences in time preferences and debt aversion. Specifically, we find that the response of managers belonging to a more long-term oriented culture is characterized by a lower recourse to debt, more investments and higher growth rates. Overall, our results show that the cultural origin of managers significantly affects firms' reaction to economic shocks and real economic outcomes.

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  • Bedendo, Mascia & Garcia-Appendini, Emilia & Siming, Linus, 2023. "Managers' cultural origin and corporate response to an economic shock," Journal of Corporate Finance, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:corfin:v:80:y:2023:i:c:s0929119923000615
    DOI: 10.1016/j.jcorpfin.2023.102412
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    2. Bao, Yangming & Li, Jie, 2024. "Cross-border M&A, gender-equal culture, and board gender diversity," Journal of Corporate Finance, Elsevier, vol. 84(C).

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    More about this item

    Keywords

    Corporate financing; Corporate investment; Culture; Covid-19;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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