Abstract

In this paper, we use data from the U.S. multinational corporations to test the relationship between national culture and corporate policies. We find that measures of national culture-such as power distance, individualism, masculinity, uncertainty avoidance, long-term orientation, and indulgence have a significant decision-making impact on corporate policies such as the level of cash holding, leverage, and dividend payout ratio. Our results indicate that cultural differences matter and offer a fresh social perspective in explaining variations in major corporate policies.