| dc.description.abstract | In this paper, I investigate the role of CEO′s cultural identity on corporate risk-taking. According to previous studies, culture influences corporate risk-taking both through the effect of CEO’s cultural background and through the effect of national culture which company belongs. Therefore, we explore that when the CEO’s cultural background differs from the national culture, which one will be more powerful and which stage of the CEO’s cultural identity does affect the CEO′s behavior.
Instead of using the CEO’s nationality defines his/her cultural background, this paper innovates with measuring CEO’s cultural background from three different stages of the CEO’s lifetime: the country of the birthplace (childhood period), the university (late adolescent period period) and the last job working place (working period).
By using this method, I can answer following three questions. First, when the CEO’s cultural background differs from the national culture of the company, which one more influential on the company risk-taking. Second, when did the risk-taking decision related cultural identity of CEO be formed; and then conclude whether the cultural identity is time-invariant. Third, I can establish the relationship between different cultural values and corporate risk-taking.
After empirical analysis, I show that CEO′s cultural background is more influential on the corporate risk-taking than the national culture of the company. I also find that the cultural identity formed in the late adolescent period, but not in other periods, affects the CEO’s decision of risk-taking. In other words, the cultural identity formed in childhood period is not significantly related to risk-taking but the cultural identity formed in the late adolescent period is. Thus, I conclude that the cultural identity is not time-invariant, whereas it will be changed due to the change of the environment. I find that only individualism, masculinity and indulgence are positively and embeddedness is negatively correlated with corporate risk-taking. These relationships remain after robustness tests. The rest of the cultural value is insignificant.
Finally, the empirical results show that the impact of CEO′s cultural background on the company risk- taking will be more relevant in the company with more CEO power. | en_US |