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How Does National Culture Affect Corporate Investment Efficiency?

How Does National Culture Affect Corporate Investment Efficiency? Corporate investment efficiency may be determined by changes in overinvestment and/or underinvestment. Prior studies showed that national culture dimensions affect firm investment efficiency. However, they failed to address whether overinvestment or underinvestment is the effective mechanism to transmit these effects. With a research data of 280,092 year-firms from 44 countries, we find that national culture affects corporate investment efficiency through underinvestment. Individualism and masculinity are positively related to investment efficiency while uncertainty avoidance and power distance are negatively related to investment efficiency. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Global Business Review SAGE

How Does National Culture Affect Corporate Investment Efficiency?

Global Business Review , Volume OnlineFirst: 1 – Jan 1, 2022

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References (48)

Publisher
SAGE
Copyright
© 2022 International Management Institute, New Delhi
ISSN
0972-1509
eISSN
0973-0664
DOI
10.1177/09721509221088898
Publisher site
See Article on Publisher Site

Abstract

Corporate investment efficiency may be determined by changes in overinvestment and/or underinvestment. Prior studies showed that national culture dimensions affect firm investment efficiency. However, they failed to address whether overinvestment or underinvestment is the effective mechanism to transmit these effects. With a research data of 280,092 year-firms from 44 countries, we find that national culture affects corporate investment efficiency through underinvestment. Individualism and masculinity are positively related to investment efficiency while uncertainty avoidance and power distance are negatively related to investment efficiency.

Journal

Global Business ReviewSAGE

Published: Jan 1, 2022

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