National Culture, Corporate Governance Practices, and Firm Value

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Séminaire de la Chaire de recherche en gouvernance de société et du Département de finance, assurance et immobilier de FSA ULaval

Omrane Guedhami
Moore Research Fellow and Professor
Moore School of Business
University of South Carolina, USA

We examine why corporate governance varies widely across countries and across firms, and why such variation matters. Using a new database from Governance Metrics International on corporate governance practices across a large number of countries and firms for 2006-2011 and employing a hierarchical linear model specification, we find that the national cultural dimension of individualism is positively associated with, whereas the national cultural dimension of uncertainty avoidance is negatively associated with, firm-level corporate governance practices. Within countries, there is a positive association between firm level corporate governance practices and firm value; however, across countries, the association is negative or zero.