Title

National Cultures and Capital Structure: Evidence from the Emerging Markets

Author(s) / Creator(s)

Ahmad E. Shahin, The American University in Cairo AUCFollow
Laila El Adly, The American University in Cairo AUCFollow
Eman Barr, The American University in Cairo AUCFollow
Islam Fathy, The American University in Cairo AUCFollow
Ahmed Taha, The American University in Cairo AUCFollow

Department

Management Department

Description or Abstract

This paper identifies the combinations between Hofstede’s six cultural aspects and four selected firm-specific factors, which have a significant impact on the choice of capital structure, in 15,821 listed companies from 34 countries in the emerging market, for the period 2012 – 2014. Thirty seven independent variables and one dependent variable have been tested using regression analysis. It has been concluded that the combinations that have a significant impact on the choice of capital structure (leverage) in the emerging markets were [Cultural – Firm-specific]:

1. Power distance – cash flows, cost of debt
2. Individualism – cash flows, cost of debt
3. Masculinity – interest coverage ratio, cost of debt
4. Uncertainty avoidance – cash flows, cost of debt
5. Long-term orientation – intangibility, cash flows, cost of debt
6. Indulgence – intangibility, cash flows, interest coverage ratio

Keywords

Capital Structure, Corporate Finance, Hofstede, Cultural Aspects, Leverage, Combination Effect, Emerging Markets

Faculty Advisor

Omar Farooq

Course

FINC 5351

Content Type

Article

Extent

11 p.

Language

eng

Recommended Citation

Shahin, Ahmad E.; El Adly, Laila; Barr, Eman; Fathy, Islam; and Taha, Ahmed, "National Cultures and Capital Structure: Evidence from the Emerging Markets" (2021). Papers, Posters, and Presentations. 94.
https://fount.aucegypt.edu/studenttxt/94