A survey on national culture and corporate financial decisions : current status and future research

Purpose: The extant literature provides substantial evidence that various facets of national culture play a significant role in corporate financial decision making. We systematically review the role of national culture on the various thematic domains of corporate financial decision making to outline what have been studies thus far and what needs to be studied. Design/methodology/approach: Keywords such as national culture, organizational culture, power distance, uncertainty avoidance, masculinity, risk aversion and individualism for a search in the prominent academic literature databases are used. The studies related to the corporate financial decision making that is tied with these keywords are identified and selected for the systematic review. Findings: The review of extant literature suggests strong evidence that national culture has a significant role in influencing corporate cash holding, corporate risk-taking, individual behaviour of the financial managers and initial public offering by the corporations. The review also indicates, although extant studies have examined the role of national culture in the key corporate financial decisions, evidence on the role of national culture in the firm's investment efficiency aspects is rather scarce. Also, what explains the role of national culture in corporate financial decision making has not been empirically exploited through causal mechanisms. Practical implications: The findings of the studies help advance our understanding of the current research status concerning the role played by the national culture in shaping corporate financial decisions and raise important future calls. Originality/value: To best of our knowledge, no prior study has systematically reviewed the role of national culture in the thematic domains of corporate financial decision making.