Common cultural relationships in corporate governance across developed and emerging financial markets

Abstract

This study investigates the corporate governance (CG) practice of business organisations in 43 countries with developed and emerging financial markets from the perspective of cross-cultural psychology. We find significant relationships between CG practice and Hofstede's cultural dimensions, and discover that the cultural dimensions of power distance and uncertainty avoidance significantly explain the development of CG practice. These two cultural dimensions fully capture the power of stock market history to explain the development of CG practice across developed and emerging financial markets, which indicates that cultural factors are more important than the length of stock market history in the development of CG. © 2007 International Association of Applied Psychology.