Corporate Governance and Cultural Values Across Countries : Empirical Evidence

The aim of this paper is to explore the impact of cultural values on corporate governance across countries. Cultural values are represented by Hofstede's (1980) cultural model, which consists of five dimensions: power distance, uncertainty avoidance, individualism, masculinity and time orientation. While, corporate governance is represented by seven elements, which include: board size, separation of chair and CEO, independence per board, independent audit committee, remuneration disclosure, women representation on board, code of ethics, and ethics systems. Data analysis covers 24 countries across Europe, North America and Asia pacific. Empirical results show that power distance, uncertainty avoidance and masculinity cultural values have significant negative relationship with separation of chair and CEO, independent audit committee and women on board, respectively, at the 0.95 confidence level. Whereas, individualism cultural value has a significant positive relationship with code of ethics at the 0.95 confidence level. These findings shed some light on the origins of corporate governance across countries, and hence may help in the efforts towards capital markets integration across the globe