| Based on the foreign direct investment between 46 countries and regions and the overseas portfolio investment between 45 countries and regions in 2001 to 2015,the paper studies how does the magnitudes and direction of cultural distance on Hofstede’s four cultural dimensions impact the foreign direct investment and overseas portfolio investment respectively.It is found that the direction of cultural distance has an impact on foreign direct investment,but this effect is only reflected in the Hofstede uncertainty avoidance cultural dimension,and after replacing the Hofstede cultural dimension with GLOBE cultural dimension the impact is still robust.This suggests that the impact of uncertainty avoidance cultural distance on foreign direct investment is asymmetric,speak specifically,when source country invest to a country that is more risk preference(lower uncertainty avoidance)cultural distance has a negative impact on foreign direct investment,but when source country invest to a country that is more risk aversion(higher uncertainty avoidance)the cultural distance has a positive impact on foreign direct investment.This finding suggests that the direction of cultural distance is important for the choice of the target country for foreign direct investment.According to the above findings,when China choose target countries for foreign direct investment should first consider the direction of uncertainty avoidance cultural distance,and then consider the magnitudes of uncertainty avoidance cultural’distance.That is China should first choose to invest in more risk aversion countries and regions,when two sides will produce cultural complementarity to promote foreign direct investment,and this promotion will increase with the cultural distance increases,so China should then choose a more risk aversion countries with large cultural distances to invest.In addition,the empirical study in this paper also finds that the masculinity cultural distance has a significant negative impact on foreign direct investment,and this effect has nothing to do with the direction of the cultural distance.According to this conclusion,this paper argues that China should choose countries with similar values in the competition and material pursuit to carry out foreign direct investment.Finally,this paper also finds that the uncertainty avoidance,masculinity cultural distance both have a significant positive effect on the overseas portfolio investment.This positive influence is independent of the direction of these two cultural distances.Therefore,China should choose countries with large difference on the concept of risk return and material pursuit to carry out overseas portfolio investment.Because these countries’（regions’） securities market environment has a big difference with China,it’s good for decentralized systemic risk and optimize asset allocation. |
