Journal of Economy Culture and Society

SUBMITINFORMATION
EnglishTürkçe

Research Article


DOI :10.26650/JECS2023-1304400   IUP :10.26650/JECS2023-1304400    Full Text (PDF)

A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions

Filiz Bozagaç, Ömür Saltık, Mert Aktaş, Süleyman Değirmen

This study investigates the correlation between corporate financial ratios and cultural dimensions across countries in order to guide technology firms in adapting to the current financial landscape characterized by limited borrowing options and higher interest rates. Using Hofstede’s subregional continental classification, it examines the relationship betweencapital structure and value among 4,237 publicly listed technology firms in 46 countries. The study analyzes financial ratios and connects them with Hofstede’s subdimensions of individualism and uncertainty avoidance culture. The findings reveal a significant relationship between cultural dimensions and financial ratios, with individualism and uncertainty avoidance being influential factors. Countries emphasizing individuality tend to have higher borrowing rates, whereas those with a strong preference for uncertainty avoidance exhibit higher gross margins and total debt-to-equity ratios. The borrowing rate variable does not directly affect the dimensions of femininity versus masculinity and uncertainty avoidance; however, it impacts the dimension of individualism versus collectivism. Overall, this study provides valuable insights to enable technology firms to make informed decisions, manage financial structures, and effectively navigate the current financial landscape.

Keywords: Cultural dimensions, Corporate finance, Capital structure, Structural equation model, Technology sector
JEL Classification : C3 , M21 , O16

PDF View

References

  • Agyei, J., Sun, S., & Abrokwah, E. (2020). Trade-off theory versus pecking order theory: Ghanaian evidence. Sage Open, 10(3), 1-13. https://doi.org/10.1177/2158244020940987 google scholar
  • Ahmad, N. S. M., & Atniesha, M. R. A. A. (2018). The pecking order theory and start-up financing of small and medium enterprises: Insight into available literature in the Libyan context. Financial Markets, Institutions and Risks, 2(4), 5-12. google scholar
  • Al-Zoubi, H. A., O’Sullivan, J. A., & Alwathnani, A. M. (2018). Business cycles, financial cycles and capital structure. Annals of Finance, 14(1), 105-123. google scholar
  • Ardalan, K. (2017). Capital structure theory: Reconsidered. Research in International Business and Finance, 39(B), 696-710. google scholar
  • Arosa, C., Richie, N., & Schuhmann, P. W. (2014). The impact of culture on market timing in capital structure. Research in International Business and Finance, 31(1), pp.178-192. google scholar
  • Baker, M., & J. Wurgler, (2002). Market timing and capital structure. Journal of Finance, 57(1), 1-32. google scholar
  • Banerjee, S., Heshmati, A., & Wihlborg, C. (1999). The dynamics of capital structure. New York University-Salomon Center-Leonard N. Stern School of Business, New York, NY, 6-8. google scholar
  • Bukalska, E. (2019). Testing trade-off theory and pecking order theory under managerial overconfidence. International Journal of Management and Economics, 55(2), 99-117. google scholar
  • Cheung, M. W., & Chan, W. (2009). A two-stage approach to synthesizing covariance matrices in meta-analytic structural equation modeling. Structural Equation Modeling: A Multidisciplinary Journal, 16(1), 28-53. google scholar
  • Chen, S. Y., & Chen, L. J. (2011). Capital structure determinants: An empirical study in Taiwan. African Journal of Business Management, 5(27), 10974-10983. google scholar
  • Chui, A. C. W., Kwok, C. C. Y., & Lloyd, A. E. (2002). The determination of capital structure: Is national culture a missing piece to the puzzle?. Journal of International Business Studies, 33(1), 99-127. google scholar
  • Cohen, J. (1988). Statistical Power Analysis for the Behavioral Sciences. Routledge Academic, New York, NY, 77-83. google scholar
  • De Jong, E., & Semenov, R., (2002). Cross-Country Differences in Stock Market Development: A Cultural View. “Retrieved from” SSRN: https://ssrn.com/abstract=301374 or http://dx.doi.org/10.2139/ssrn.301374. google scholar
  • Du, J., Wu, H., & Jin, R. (2019). Capital structure of public-private partnership projects: a sustainability perspective. Sustainability, 11(13), 3505, 1-25. google scholar
  • Durand, D. (1952). Costs of debt and equity funds for business: trends and problems of measurement. In Conference on research in business finance. “Retrieved from” http://www.nber.org/books/univ52-1 (accssed 20 07.2022), 215-262, January. google scholar
  • Durand, D. (1959). The cost of capital, corporation finance, and the theory of investment: comment. The American Economic Review, 49(4), 639-655. google scholar
  • Esperanca, J.P., Gama, A.P.M., & Gulamhussen, M.A., (2003). Corporate Debt Policy of Small Firms: An Empirical (Re) Examination. Journal of Small Business and Enterprise Development, 10(1), 62-80. google scholar
  • Frank, M. Z., & Goyal, V. K. (2003). Testing the pecking order theory of capital structure. Journal Of Financial Economics, 67(2), 217-248. google scholar
  • Gleason, K. C., Mathur, L. K., & Mathur, I. (2000). The interrelationship between culture, capital structure, and performance: evidence from European retailers. Journal of business research, 50(2), 185-191. google scholar
  • Harris, M., & Raviv, A. (1991). The theory of capital structure. The Journal of Finance, 46(1), 297-355. google scholar
  • Hasanuddin, R. (2021). The influence of investment decisions, dividend policy and capital structure on firm value. Jurnal Economic Resource, 4(1), 39-48. google scholar
  • Heinkel, R. (1982). A theory of capital structure relevance under imperfect information. The Journal of Finance, 37(5), 1141-1150. google scholar
  • Hofstede, G. (1980). Culture’s consequences: International differences in work related values. Sage, Beverly Hills, CA, 32-244. google scholar
  • Hofstede, G. (1983). The cultural relativity of organizational practices and theories. Journal of International Business Studies, 14(2), 75-89. google scholar
  • Hofstede, G. H., & Bond, M. H. (1988). The Confucius connection: from cultural roots to economic growth. Organizational Dynamics, 16(4), 5-21. google scholar
  • Hofstede, G. (1997). Cultures and organizations: Software of the mind. London: McGraw-Hill. Vol.2, 3-7, 2005. google scholar
  • Hofstede, G. H. (2001). Culture‘s consequences: Comparing values, behaviors, ınstitutions, and organizations across nations (2nd ed.). Sage Publication, ThoABDnd Oaks CA, 32-244. google scholar
  • House, R. J., Wright, N. S., & Aditya, R. N. (1997). Cross-cultural research on organizational leadership: A critical analysis and a proposed theory. In P. C. Earley & M. Erez (Eds.), New perspectives on international industrial/ organizational psychology, The New Lexington Press/Jossey-Bass Publishers, San Francisco, 535-625. google scholar
  • Kearney, C., Mac an Bhaird, C., & Lucey, B. M. (2012). Culture and capital structure in small and medium sized firms. “Retrieved from” SSRN: https://ssrn.com/abstract=2185284 or http://dx.doi.org/10.2139/ssrn.2185284 google scholar
  • Kluckhohn, C. (1962). Culture and behavior. Free Press Glencoe, New York. google scholar
  • Korajczyk, R. A., & Levy, A. (2003). Capital structure choice: macroeconomic conditions and financial constraints”. Journal of Financial Economics, 68(1), 75-109. google scholar
  • Kwok, C. C., & Tadesse, S. (2006). National culture and financial systems. Journal of International Business Studies, 37(2), 227-247. google scholar
  • Lucas, D. J., & McDonald, R. L. (1990). Equity issues and stock price dynamics. The Journal of Finance, 45(4), 1019-1043. google scholar
  • Luigi, P., & Sorin, V. (2009). “A review of the capital structure theories”. Annals of Faculty of Economics, 3(1), 315-320. google scholar
  • Lyandres, E. (2006). Capital structure and interaction among firms in output markets: Theory and evidence. The Journal of Business, 79(5), 2381-2421. google scholar
  • Myers, S. C. (1984). Capital structure puzzle. NBER Working Paper,1393, 1-35 google scholar
  • Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221. google scholar
  • Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, 48(3), 261-297. google scholar
  • Papaioannou, G., & Karagozoglu, A. (2017). Underwriting services and the new issues market. Academic Press, London, United Kingdom, 129-248. google scholar
  • Rashid, M., Hj, D. S. N. K. P., & Izadi, S. (2020). National culture and capital structure of the Shariah compliant firms: Evidence from Malaysia, Saudi Arabia and Pakistan. International Review of Economics & Finance. “Retrieved from” https://doi.org/10.1016/j.iref.2020.10.006. 1-16. google scholar
  • Roberts, M. R., & Sufi, A. (2009). Control rights and capital structure: An empirical investigation. The Journal of Finance, 64(4), 1657-1695. google scholar
  • Schwartz, S.H., & Sagiv, L., (1995). Identifying Culture-Specifics in the Content and Structure of Values. Journal of Cross-Cultural Psychology, 26, 92-116. google scholar
  • Scott, J., (1976). A theory of optimal capital structure. The Bell Journal of Economics and Management Science, 7(1), 33-54. google scholar
  • Shahar, W. S. S. B., & Manja, S. I. (2018). Determinants of capital structure. Reports on Economics and Finance, 4(3), 139-149. google scholar
  • Shyam-Sunder, L., & Myers, S. C. (1999). Testing static tradeoff against pecking order models of capital structure. Journal of Financial Economics, 51(2), 219-244. google scholar
  • Titman, S. (1984). The effect of capital structure on a firm’s liquidation decision. Journal of Financial Economics, 13(1), 137-151. google scholar
  • Wang, D., & Esqueda, O. A. (2014). National culture effects on leverage decisions: Evidence from emerging-market ADRs. Research in International Business and Finance, 31(1), 152-177. google scholar
  • Xhaferi, S., & Xhaferi, B. (2015). Alternative theories of capital structure. European Scientific Journal, 11(7), 327-343. google scholar
  • Wardani, O. M., & Subowo, S. (2020). Factors That Influence Capital Structure With Profitability as A Moderating Variable. Accounting Analysis Journal, 9(2), 103-109. google scholar
  • Yang, G. J. A., Chueh, H., & Lee, C. H. (2014). Examining the theory of capital structure: signal factor hypothesis. Applied Economics, 46(10), 1127-1133. google scholar
  • Yıldırım, D., & Çelik, A. K. (2021). Testing the pecking order theory of capital structure: Evidence from Turkey using panel quantile regression approach. Borsa Istanbul Review, 21(4), 317-331. google scholar
  • Zheng, X., El Ghoul, S., Guedhami, O., & Kwok, C. (2012). National culture and corporate debt maturity. Journal of Banking & Finance, 36(2), 468-488. google scholar

Citations

Copy and paste a formatted citation or use one of the options to export in your chosen format


EXPORT



APA

Bozagaç, F., Saltık, Ö., Aktaş, M., & Değirmen, S. (2024). A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions. Journal of Economy Culture and Society, 0(69), 15-32. https://doi.org/10.26650/JECS2023-1304400


AMA

Bozagaç F, Saltık Ö, Aktaş M, Değirmen S. A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions. Journal of Economy Culture and Society. 2024;0(69):15-32. https://doi.org/10.26650/JECS2023-1304400


ABNT

Bozagaç, F.; Saltık, Ö.; Aktaş, M.; Değirmen, S. A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions. Journal of Economy Culture and Society, [Publisher Location], v. 0, n. 69, p. 15-32, 2024.


Chicago: Author-Date Style

Bozagaç, Filiz, and Ömür Saltık and Mert Aktaş and Süleyman Değirmen. 2024. “A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions.” Journal of Economy Culture and Society 0, no. 69: 15-32. https://doi.org/10.26650/JECS2023-1304400


Chicago: Humanities Style

Bozagaç, Filiz, and Ömür Saltık and Mert Aktaş and Süleyman Değirmen. “A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions.” Journal of Economy Culture and Society 0, no. 69 (Nov. 2024): 15-32. https://doi.org/10.26650/JECS2023-1304400


Harvard: Australian Style

Bozagaç, F & Saltık, Ö & Aktaş, M & Değirmen, S 2024, 'A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions', Journal of Economy Culture and Society, vol. 0, no. 69, pp. 15-32, viewed 14 Nov. 2024, https://doi.org/10.26650/JECS2023-1304400


Harvard: Author-Date Style

Bozagaç, F. and Saltık, Ö. and Aktaş, M. and Değirmen, S. (2024) ‘A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions’, Journal of Economy Culture and Society, 0(69), pp. 15-32. https://doi.org/10.26650/JECS2023-1304400 (14 Nov. 2024).


MLA

Bozagaç, Filiz, and Ömür Saltık and Mert Aktaş and Süleyman Değirmen. “A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions.” Journal of Economy Culture and Society, vol. 0, no. 69, 2024, pp. 15-32. [Database Container], https://doi.org/10.26650/JECS2023-1304400


Vancouver

Bozagaç F, Saltık Ö, Aktaş M, Değirmen S. A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions. Journal of Economy Culture and Society [Internet]. 14 Nov. 2024 [cited 14 Nov. 2024];0(69):15-32. Available from: https://doi.org/10.26650/JECS2023-1304400 doi: 10.26650/JECS2023-1304400


ISNAD

Bozagaç, Filiz - Saltık, Ömür - Aktaş, Mert - Değirmen, Süleyman. “A New Era of Capital Structure Choices in Technology Firms: Insights on Cultural Dimensions”. Journal of Economy Culture and Society 0/69 (Nov. 2024): 15-32. https://doi.org/10.26650/JECS2023-1304400



TIMELINE


Submitted28.05.2023
Accepted11.11.2023
Published Online06.05.2024

LICENCE


Attribution-NonCommercial (CC BY-NC)

This license lets others remix, tweak, and build upon your work non-commercially, and although their new works must also acknowledge you and be non-commercial, they don’t have to license their derivative works on the same terms.


SHARE




Istanbul University Press aims to contribute to the dissemination of ever growing scientific knowledge through publication of high quality scientific journals and books in accordance with the international publishing standards and ethics. Istanbul University Press follows an open access, non-commercial, scholarly publishing.