Educational Research

Educational Research (ISSN:2141-5161) Vol. 2(11), pp. 1685-1707 November 2011         
Copyright © 2011 International Research Journals


Full Length Research Paper

Socio-cultural heritage and financial decisions: An empirical study

Ben Atitallah Rihab* and Ben Jedidia Lotfi

University of Sfax, Faculty of Economic Sciences and Management, Airport Road, 1088, Sfax 3018, Tunisia. 

*Corresponding Author E-mail:

 Received 01 October, 2011; Accepted 18 October, 2011


This research proposes to introduce the sociology of culture to explain variations in national corporate capital structures. With the difference in standard finance theories that suggest that financing decisions should be determined only by rational considerations, this research adopts the impact of cultural values on national corporate debt ratio. Based on a sample of 14.594 firms belonging to three geographical areas (Latin America, Europe and East Asia and Pacific), this cross-sectional study suggests that national culture affects corporate capital structures. In particular, cultural values such as individualism and collectivism variables play a determining part to define the perimeters of financing the companies. The findings lead us to think of the need for supplementing the disciplinary vision of the debt to get to a richer representation (cognitive) for the explanation of the financial behavior of the firm.


Keywords: Behavioral corporate finance, cultural dimension, capital structure, leverage, stewardship theory.

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