Do Peers and National Culture Matter for Capital Structure Decisions of Emerging Market Corporations
Abstract/Description
The study examined the role national culture plays as an intervening factor in the relationship between peer effects and corporate capital structure. The methodology uses two stage least squares (2SLS) with fixed effects and an instrumental variable approach to the regression findings from OLS. The findings reveal that peers' leverage matters for a corporation when deciding its own leverage. Moreover, it is also observed that enterprises follow their peers in low power and high uncertainty, individualism, and masculinity cultures. Therefore, managers might take their peers' leverage decisions in the industry into account when making judgments about leverage for their own firm. Also, as emerging economies frequently experience puzzling and unpredictable conditions, risk-free information gleaned from peers' financial actions may help reduce the time and expense involved in making this important choice.
Track
Finance
Session Number/Theme
Session 1B: Finance
Session Chair
Dr. Sana Tauseef ; Dr. Mohsin Khawaja
Start Date/Time
26-5-2023 2:45 PM
End Date/Time
26-5-2023 4:45 PM
Location
MCS-4, Aman-CED, First Floor, Institute of Business Administration, Karachi
Recommended Citation
Aman, A., Zaighum, I., & Abd Karim, M. B. (2023). Do Peers and National Culture Matter for Capital Structure Decisions of Emerging Market Corporations. 3rd IBA SBS International Conference 2024. Retrieved from https://ir.iba.edu.pk/sbsic/2023/program/5
COinS
Do Peers and National Culture Matter for Capital Structure Decisions of Emerging Market Corporations
MCS-4, Aman-CED, First Floor, Institute of Business Administration, Karachi
The study examined the role national culture plays as an intervening factor in the relationship between peer effects and corporate capital structure. The methodology uses two stage least squares (2SLS) with fixed effects and an instrumental variable approach to the regression findings from OLS. The findings reveal that peers' leverage matters for a corporation when deciding its own leverage. Moreover, it is also observed that enterprises follow their peers in low power and high uncertainty, individualism, and masculinity cultures. Therefore, managers might take their peers' leverage decisions in the industry into account when making judgments about leverage for their own firm. Also, as emerging economies frequently experience puzzling and unpredictable conditions, risk-free information gleaned from peers' financial actions may help reduce the time and expense involved in making this important choice.
