The determination of capital structure: Is national culture a missing piece to the puzzle?

Chun Wai Andy Chui, Alison E. Lloyd, Chuck C.Y. Kwok

Research output: Journal article publicationJournal articleAcademic researchpeer-review

226 Citations (Scopus)


Why does knowing the nationality of the company help predict its financial leverage? Differences in institutional backgrounds provide only a partial answer to this question. This study suggests that national culture affects corporate capital structures. Empirical hypotheses, drawn from financial models and cross-cultural psychology, are tested against a sample of 5591 firms across 22 countries. Results show that countries with high scores on the cultural dimensions of “conservatism” and “mastery” tend to have lower corporate debt ratios. The effects are strong and remain significant even after accounting for differences in economic performance, legal systems, financial institutions, and some other well-known determinants of debt ratios.
Original languageEnglish
Pages (from-to)99-127
Number of pages29
JournalJournal of International Business Studies
Issue number1
Publication statusPublished - 1 Jan 2002

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Strategy and Management
  • Management of Technology and Innovation

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