Managers' cultural origin and corporate response to an economic shock
Journal
Journal of Corporate Finance
ISSN
0929-1199
Type
journal article
Date Issued
2023-06
Author(s)
Mascia Bedendo
;
Garcia-appendini Emilia
;
Linus Siming
Abstract
We exploit the exogenous Covid-19 shock in a bicultural area of Italy to identify cultural differences in the way companies respond to economic shocks. Firms with managers of diverse cultural backgrounds resort to different forms of government aid, diverge in their investment decisions, and have different growth rates. These findings are consistent with cultural differences in time preferences and debt aversion. Specifically, we find that the response of managers belonging to a more long-term oriented culture is characterized by a lower recourse to debt, more investments and higher growth rates. Overall, our results show that the cultural origin of managers significantly affects firms' reaction to economic shocks and real economic outcomes.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier BV
Volume
80
Subject(s)
Division(s)