Cultural influence of companies? Analysis of cash level across different countries

Details

Supervisors

Nguyen, Anh

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

The objective of this report was to determine how a company’s culture influences its cash level and whether differences exist between different countries. Indeed, literature highlights that while the impacts of national culture and individual behavior on corporate cash levels are well-studied, the influence of corporate culture remains underexplored. This study focuses on the social denomination of the company (lucrative vs. non lucrative) to define the company’s culture. The regression model uses the cash ratio as the dependent variable and lucrativeness as the independent one with industry, firm size, UAI (Uncertainty Avoidance Index), total revenue, and leverage as control variables. Results showed that lucrativeness holds a negative relationship with the cash ratio. Subsequently, the first comparative test confirmed that French non-profit organizations have significantly higher cash reserves than their American counterparts, aligning with France’s higher UAI. The second test showed that non-profit organizations in both countries were found to maintain higher liquidity ratios than for-profit ones. Future research should delve deeper into various aspects of corporate culture and industry impacts on cash reserves to provide a more comprehensive understanding of organizational financial management practices.