Impact of Culture on Board of Directors Composition A cross-country comparison study between developed and non-developed countries

Abstract

There are a very low proportion of women on corporate governance. More importantly, the difference on women representation in boards gets magnified when taking into account the level of development of a country. Such differences gives rising to the questions: Why does the number of women in the board of directors vary from one country to another? Moreover, why does it vary from one economical region to another? This thesis tests whether this difference is due to the variation in cultural aspects across countries. Using a 2,900 sample of listed companies between Latin America and European countries, this thesis performs an OLS multiple regression with interactions to analyze the relationship between the percentage of women in the board of directors and the four Hofstede’s cultural dimensions, while controlling for other factors. The analysis of 29 countries during 2015 reveals that masculinity and individualism indeed have strong effects on corporate governance and should be taken into account in business and governmental policies. Moreover, this thesis also provides a basis for further research since, as seen in an OLS regression with interactions, the effect of all cultural dimensions is strengthened when including the level of income of the countries.

Keywords: Culture, board gender diversity, Hofstede’s cultural dimensions, multiple regression analysis, cross-country study, gender equality