University of Twente Student Theses


Cultural Dimensions Influencing The Capital Structure: A Study On The G7

Willemink, T. D. (2018) Cultural Dimensions Influencing The Capital Structure: A Study On The G7.

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Abstract:Even though capital structure determinants have been researched extensively in the past decades, there is still no answer available to the capital structure puzzle, termed by Myers (1984). Previous literature has shown that both firm-specific as well as country-level determinants influence the capital structure choices of companies. Firm-specific determinants have, however, received much more attention compared to country-level ones. For this reason, the culture of a country has also not been researched a lot in existing literature. Therefore, this study aims to fill this gap in the existing capital structure literature by providing an examination on what degree Hofstede’s five cultural dimensions impact the capital structure choices made by firms in the G7. This was tested by way of four OLS regressions using the data of 5,216 listed companies, in which was shown whether Hofstede’s cultural dimensions would significantly impact the leverage ratio of companies. This study finds, also after controlling for other firm-specific and country-level determinants, that Hofstede’s cultural dimensions do result in significant differences in the capital structure formation of companies. Because of this, it is concluded that the cultural dimensions do indeed have an influence on the capital structure choices of companies.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
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