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National culture and corporate risk-taking around the world

Author

Listed:
  • Frijns, Bart
  • Hubers, Frank
  • Kim, Donghoon
  • Roh, Tai-Yong
  • Xu, Yahua

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.

Suggested Citation

  • Frijns, Bart & Hubers, Frank & Kim, Donghoon & Roh, Tai-Yong & Xu, Yahua, 2022. "National culture and corporate risk-taking around the world," Global Finance Journal, Elsevier, vol. 52(C).
    • Handle: RePEc:eee:glofin:v:52:y:2022:i:c:s1044028322000126
    DOI: 10.1016/j.gfj.2022.100710
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    4. Matteo M. Marini & Giulia Ulivieri, 2024. "Meta-analyses in Economic Psychology: A sustainable approach to cross-cultural differences," MUNI ECON Working Papers 2024-01, Masaryk University.
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    More about this item

    Keywords

    National culture; Corporate risk-taking; Individualism;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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