Cultural Distance and Stock Market Performance: A TSCS Analysis

Rahman, Matiur
January 2015
Wealth: International Journal of Money, Banking & Finance;Jan-Jun2015, Vol. 4 Issue 1, p4
Academic Journal
This paper investigates the influences of four dimensions of Hofstede's cultural distance using the Time Series and Cross-sectional (TSCS) analysis. Data on stock market indices of 36 selected advanced and advancing countries for a 15-year period spanning over 1997 through 2012 are employed. As expected, power distance, individualism and masculinity spur stock markets across these selected countries. In contrast, uncertainty avoidance unleashes negative influence on these stock markets. However, the aforementioned together can barely explain 12% of the stock market movements across 36 selected countries. Presumably, this is due to the omissions of a host of relevant macroeconomic and financial variables.


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