National Cultural Differences And International Capital Flows

Most international financial models are based on rational expectation paradigm.The economic subjects in this paradigm have a rational,accurate and correct perception of the law of complex economic process beyond their knowledge,experience,circumstances and "human nature",which is obviously different from the reality.This paper argues that the international financial model should be based on the perception,values and cultural characteristics of cross-cultural actors(individuals,enterprises and countries).Only by deeply deconstructing culture and analyzing the perception of multi-level cultural subjects for culture can we better understand the impact of cultural differences on various types of investment in international capital flows.This paper first defines the concept of "national culture" and"capital flow" to define the scope of the article."Culture" itself is not only an all embracing broad framework covering ancient and modern times,but also a basic element influencing human behavior and economic results imperceptibly.How to see the impact of cultural differences on capital flow under the interaction of economic and institutional factors has become the primary issue of this paper.This not only requires researchers to study the concept of culture and separate the quantifiable parts,but also carefully explore the effectiveness of cultural differences in different dimensions,different levels,different directions and intensities;moreover,it is necessary to combine these issues with international capital flows of different levels and contents,and find appropriate prediction methods and regression models.Fortunately,since the 1980s,Hofstede's achievements in cultural sociology have quantified and applied the core values of culture,and their validity and universality have also been verified.In this paper,the dimension of cultural values is taken as the main way to measure cultural differences,with the assistance of national cultural familiarity and managers'perception of cultural differences to explore the correlation and influence of national cultural differences on economic results.In the third chapter,the author introduces the national cultural differences into the economic model to establish the theoretical basis of this study,including the transmission path,theoretical development and theoretical framework.The section of transmission path mainly describes the mechanism of culture's gradual effect on economic results,demonstrates the applicability of the combination of culture and financial research,and combs the influence of cultural differences on micro enterprise decision-makers,medium-sized enterprises' foreign investment,and then cross-border capital flow between macro countries in combination with literature.The theoretical development part introduces the characterization of international business in economics the background,development,inheritance and applicability of the gravity model of capital flow;and the theoretical framework part is from the perspective of capital flow,combining with literature to elaborate the influence of cultural differences on different capital flows and capital flow composition.The micro and basic carrier unit of culture is human.The actor perceives the world from his own cultural perspective and acts accordingly.From the perspective of international capital flow,the main body of cross-border transfer of financial assets is enterprises,and the decision-making subject of enterprises is enterprise managers.As the carrier of culture and corporate behavior,managers' cross-cultural experience based on learning has formed their unique perception of national cultural differences,and then shaped their management cognition of the significance of national cultural differences on the cross-border development of companies,and become the basis for formulating the internationalization strategy of enterprises.In the fourth chapter,the cross-cultural experience of the board of directors is regarded as the proxy variable of corporate perception of cultural differences.Using logit and tobit models,this paper empirically tests the correlation between the overall cross-cultural sensitivity of the board of directors of Chinese listed companies and the number of shares held by overseas M&As.To some extent,the empirical research results of company level data echo the negative stereotype of "talking about cultural differences".In the process of practice,cultural differences are not only the"culprits" of information friction and potential transaction costs,but also "ministers of the humerus" to promote innovation,coordination and diversified development.To solve this problem,this paper,from the perspective of "development exploration" of organizational behavior,intends to add experience to the "positive cross-cultural research" approach.This paper summarizes the data of Chinese enterprises' foreign investment in 60 host countries from 2005 to 2018 as the national level panel data,and establishes a unilateral dynamic gravity model.Taking the influence of cultural differences on the location decision of Chinese enterprises' foreign investment as an example,based on nonparametric covariance moment estimation and D-K correction standard error,this paper discusses the influence of cultural distance on the overseas direct investment of developing country enterprises And the nonlinear effect of flow.The empirical results show that:the overall impact of cultural distance on the location choice of China's FDI is inverted U-shaped;the influence degree and direction of cultural dimensions on location choice are not consistent.Further grouping results show that the inverted U-shaped effect of cultural distance is more obvious in Chinese enterprises'investment in OECD countries,while it is negatively correlated with investment in non-OECD countries.In the first two chapters,the validity and robustness of the influence of cultural differences are well supported by data.Next,we will expand our horizon to the macro international bilateral capital flows.Limited by the data and methods,there are few literatures on cross-border capital flow and composition from the perspective of gravity,and the approach of introducing cultural differences into the analysis model is even less popular.The innovation of this paper is to explore the interaction and coupling between cultural differences and various influencing factors in different contexts,aiming at various forms of transnational investment flows,including direct investment,indirect investment and international capital flow.The influence of cultural differences on different capital flows is different.The study of two-way capital flow can help us understand the nature of information friction faced by different economic entities at all levels and the composition of transnational capital market,and explore the influence of cultural differences on the composition of overall capital flow,so as to deepen and expand researchers' understanding of cultural differences and dynamic financial capital Understanding of the relevance of cross-border configuration structure changes.Based on the cross-border capital flow data,this paper establishes a dynamic panel gravity model,and makes an empirical analysis based on the two-step robust System GMM method.The empirical results show that cultural familiarity has a positive impact on the direction and flow of international direct investment and indirect investment.Cultural distance has a negative correlation with international direct investment,and has a positive correlation with indirect investment In contrast,the negative impact of cultural distance on FDI is more obvious in non OECD countries,On the whole,cultural distance has a positive impact on the ratio of international indirect investment to direct investment,indicating that countries still prefer to invest in non physical assets with lower degree of commitment to host countries with cultural distance.