Culture of Individualism and Uncertainty Avoidance in the G20 Countries’ Industries: An Analysis of Capital Structure and Performance

Abstract

The purpose of this study was to analyze the influence of two dimensions of national culture (individualism and uncertainty avoidance) in the relationship between the choice of capital structure formation and the performance of companies in the G20 countries from 2013 to 2018, all in the industrial segment. The companies that made up the sample totaled 3,431, all in the G20 countries, with a total of 14,743 observations. The analyses were performed by means of econometric structural equations. The results showed a significant and positive relationship between the capital structure and the performance of companies. Also, the capital structure variable and the cultural dimensions of individualism and uncertainty avoidance were positively and statistically significant in the performance of  companies, proving that culture has an influence on the relationship between structure and performance. Finally, emerging and developed markets were checked separately, demonstrating that in emerging markets the relationship of structure with performance to culture moderation was less affected by national culture (individualism and uncertainty avoidance) than in the developed countries.

Keywords:

national culture capital structure performance corporate finance governance

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