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Does cultural value affect board efficacy? Insights on international corporate governance

Does cultural value affect board efficacy? Insights on international corporate governance PurposeThis study aims to investigate how culture can either reinforce or attenuate the board efficacy (a key element of corporate governance).Design/methodology/approachThe study uses the data from the World Economic Forum (2006-2014) of 69 countries. The data were restricted to 69 countries because Hofstede et al. (2010) provided cultural value data from 111 countries. However, the data from 42 countries were incomplete for Hofstede et al.’s four dimensions.FindingsThe study is the first to show that more religious diversity has a significant negative impact on stronger board efficacy in evaluating corporate governance practices. The results also indicate that more uncertainty avoidance in a country has a significant negative impact and corporate ethics and auditing standards have a positive impact on board efficacy.Originality/valueThe study extends Hofstede et al.’s (2010) cultural value by incorporating religious diversity and corporate ethics as cultural variables in explaining board efficacy in corporate governance literature. The Organisation for Economic Co-operation and Development, the World Bank and the International Monetary Fund should focus on cultural factors while developing a single set of Corporate Governance Code worldwide. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Law and Management Emerald Publishing

Does cultural value affect board efficacy? Insights on international corporate governance

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1754-243X
DOI
10.1108/IJLMA-09-2016-0081
Publisher site
See Article on Publisher Site

Abstract

PurposeThis study aims to investigate how culture can either reinforce or attenuate the board efficacy (a key element of corporate governance).Design/methodology/approachThe study uses the data from the World Economic Forum (2006-2014) of 69 countries. The data were restricted to 69 countries because Hofstede et al. (2010) provided cultural value data from 111 countries. However, the data from 42 countries were incomplete for Hofstede et al.’s four dimensions.FindingsThe study is the first to show that more religious diversity has a significant negative impact on stronger board efficacy in evaluating corporate governance practices. The results also indicate that more uncertainty avoidance in a country has a significant negative impact and corporate ethics and auditing standards have a positive impact on board efficacy.Originality/valueThe study extends Hofstede et al.’s (2010) cultural value by incorporating religious diversity and corporate ethics as cultural variables in explaining board efficacy in corporate governance literature. The Organisation for Economic Co-operation and Development, the World Bank and the International Monetary Fund should focus on cultural factors while developing a single set of Corporate Governance Code worldwide.

Journal

International Journal of Law and ManagementEmerald Publishing

Published: Nov 13, 2017

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