The national culture as a determinant of ERM quality: Empirical evidence in the European banking context

Titolo Rivista MANAGEMENT CONTROL
Autori/Curatori Alessandra Allini, Raffaela Casciello, Marco Maffei, Martina Prisco
Anno di pubblicazione 2022 Fascicolo 2022/1
Lingua Inglese Numero pagine 24 P. 79-102 Dimensione file 333 KB
DOI 10.3280/MACO2022-001006
Il DOI è il codice a barre della proprietà intellettuale: per saperne di più clicca qui

Qui sotto puoi vedere in anteprima la prima pagina di questo articolo.

Se questo articolo ti interessa, lo puoi acquistare (e scaricare in formato pdf) seguendo le facili indicazioni per acquistare il download credit. Acquista Download Credits per scaricare questo Articolo in formato PDF

Anteprima articolo

FrancoAngeli è membro della Publishers International Linking Association, Inc (PILA)associazione indipendente e non profit per facilitare (attraverso i servizi tecnologici implementati da CrossRef.org) l’accesso degli studiosi ai contenuti digitali nelle pubblicazioni professionali e scientifiche

This paper aims to investigate whether and how enterprise risk management (ERM) quality may be influenced by national culture. Using a sample of 105 banks from 21 countries over the period of 2013-2020, we document that power distance, masculinity, uncertainty avoidance and long-term orientation are significantly associated with ERM quality. Our research contributes to the existing risk literature by highlighting how the dimensions of national culture impact ERM quality. The article also discusses how the cultural dimensions of a national culture embedded in the organizational values can influence the quality of bank’s risk management processes. This study helps banking regulators by providing a clear picture of how an informal institution, such as national culture, contributes to explaining differences in the quality of ERM implementation.

Keywords:Enterprise risk management, National culture, European banks, Organ-izational culture.

  1. Caldarelli A., Fiondella C., Maffei M., Zagaria C. (2016), Managing risk in credit cooperative banks: Lessons from a case study, Management Accounting Research, 32, pp. 1-15.
  2. Aabo T., Fraser J.R., Simkins B.J. (2005), The rise and evolution of the chief risk officer: Enterprise risk management at Hydro One, Journal of Applied Corporate Finance, 17(3), pp. 62-75.
  3. Adams R.B., Hermalin B.E., Weisbach M.S. (2010), The role of boards of directors in corporate governance: A conceptual framework and survey. Journal of Economic Literature, 48, pp. 58-107.
  4. Allegrini M., D’Onza, G. (2011), Corporate Governance, risk management e responsabilità sociale fra presente e futuro dell’attività di internal auditing, Management Control, 1, 151-178. DOI: 10.3280/MACO2011-001007
  5. An Z., Cao Z., Chen Z., Li D. (2019), Does individualistic culture impact operational risk? European Financial Management, 26, pp. 808-838.
  6. Arena M., Arnaboldi M. (2014), Risk and performance management: are they easy partners? Management Research Review, 37, pp. 152-166.
  7. Arena M., Arnaboldi M., Azzone G. (2011), Is enterprise risk management real? Journal of Risk Research, 14(7), pp. 779-797.
  8. Ashbaugh-Skaife H., Collins D.W., LaFond R. (2006), The effects of corporate governance on firms’ credit ratings, Journal of Accounting and Economics, 42(1-2), pp. 203-243.
  9. Association of Chartered Certified Accountants and Institute of Management Accountants. (2016), Innovation and ERM: Partners in managing the waves of disruption.
  10. Bailey C. (2019), The relationship between chief risk officer expertise, ERM quality, and firm performance, Journal of Accounting, Auditing and Finance, pp. 1-25.
  11. Baxter R., Bedard J.C., Hoitash R., Yezegel A. (2013), Enterprise risk management program quality: Determinants, value relevance, and the financial crisis, Contemporary Accounting Research, 30, pp. 1264-1295.
  12. Beasley M.S., Clune R., Hermanson D. R. (2005), Enterprise risk management: An empirical analysis of factors associated with the extent of implementation, Journal of Accounting and Public Policy, 24, pp. 521-531.
  13. Beasley M.S., Pagach D., Warr R. (2008), Information conveyed in hiring announcements of senior executives overseeing enterprise-wide risk management processes. Journal of Accounting, Auditing and Finance, 23, pp. 311-332.
  14. Belsley D.A., Kuh E., Welsch R.E. (1980), Regression diagnostics: Identifying influential data and sources of collinearity, New York, John Wiley.
  15. Beretta S., Bozzolan S. (2004), A framework for the analysis of firm risk communication, The International Journal of Accounting, 39, pp. 265-288.
  16. Berger A.N., Li X., Morris C.S., Roman R.A. (2021), The effects of cultural values on bank failures around the world, Journal of Financial and Quantitative Analysis, 56(3), pp. 945-993.
  17. Berry-Stolzle T.R., Xu J. (2018), Enterprise risk management and the cost of capital, Journal of Risk and Insurance, 85, pp. 159-201.
  18. Bertinetti G.S., Cavezzali E., Gardenal G. (2013), The effect of the enterprise risk management implementation on the firm value of European companies, Department of Management, Università Ca’ Foscari Venezia Working Paper, (10).
  19. Bohnert A., Gatzert N., Hoyt E., Lechner P. (2019), The drivers and value of enterprise risk management: Evidence from ERM ratings, The European Journal of Finance, 25(3), pp. 234–255. DOI: 10.1080/1351847X.2018.1514314
  20. Boubakri N., Chkir I., Saadi S., Zhu H. (2021), Does national culture affect corporate innovation? International evidence, Journal of Corporate Finance, 66, 101847.
  21. Bromiley P., McShane M., Nair A., Rustambekov E. (2015), Enterprise risk management: Review, critique, and research directions, Long Range Planning, 48(4), pp. 265-276.
  22. Cattaneo C., Bassani G. (2018), Enterprise Risk Management e Management Accounting Systems in una Banca di Credito Cooperativo, Management Control, Suppl. 1, pp. 13-33. DOI: 10.3280/MACO2018-SU2002
  23. Cebenoyan A.S., Strahan P.E. (2004), Risk management, capital structure and lending at banks. Journal of Banking and Finance, 28(1), pp. 19-43.
  24. Chen J., Jiao L., Harrison G. (2019), Organisational culture and enterprise risk management: The Australian not‐for‐profit context, Australian Journal of Public Administration, 78(3), pp. 432-448.
  25. Chui A.C., Kwok C.C., Zhou G. (2016), National culture and the cost of debt, Journal of Banking and Finance, 69, pp. 1-19.
  26. Committee of Sponsoring Organizations of the Treadway Commission. (2004), Enterprise risk management – Integrated framework: Application techniques, New York, NY, AICPA.
  27. Committee of Sponsoring Organizations. (2017), Enterprise risk management: Integrating with strategy and performance.
  28. D’Onza G. (2008), Il sistema di controllo interno nella prospettiva del risk management, Giuffrè Editore.
  29. Deloitte Touche Tohmatsu Limited. (2011). Global risk management survey (8th ed.). -- https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/risk/us_en_globalrisksurvey8_ 23072013.pdf.
  30. Demirtas E.A., Anagun A.S., Koksal G. (2009), Determination of optimal product styles by ordinal logistic regression versus conjoint analysis for kitchen faucets, International Journal of Industrial Ergonomics, 39(5), pp. 866-875.
  31. Dickson M.W., Den Hartog D.N., Mitchelson J. K. (2003), Research on leadership in a cross-cultural context: Making progress, and raising new questions, The leadership quarterly, 14(6), pp. 729-768.
  32. Dikova D., Sahib P.R., Van Witteloostuijn A. (2010), Cross-border acquisition abandonment and completion: The effect of institutional differences and organizational learning in the international business service industry, pp. 1981-2001. Journal of International Business Studies, 41(2), pp. 223-245.
  33. DiMaggio P.J., and Powell W.W. (1983), The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields, American sociological review, pp. 147-160.
  34. Eckles D. L., Hoyt R.E., Miller S.M. (2014), The impact of enterprise risk management on the marginal cost of reducing risk: Evidence from the insurance industry, Journal of Banking and Finance, 43, pp. 247-261.
  35. Ellul A., Yerramilli V. (2013), Stronger risk controls, lower risk: Evidence from US bank holding companies, The Journal of Finance, 68(5), pp. 1757-1803.
  36. Farrell M., Gallagher R. (2015), The valuation implications of enterprise risk management maturity. Journal of Risk and Insurance, 82(3), pp. 625-657.
  37. Ferris S.P., Jayaraman N., Sabherwal S. (2013), CEO overconfidence and international merger and acquisition activity. Journal of Financial and Quantitative Analysis, 48, pp. 137-164.
  38. Filippopoulou C., Galariotis E., Spyrou S. (2020), An early warning system for predicting systemic banking crises in the Eurozone: A logit regression approach, Journal of Economic Behavior and Organization, 172, pp. 344-363.
  39. Florio C., Leoni G. (2017), Enterprise risk management and firm performance: The Italian case, The British Accounting Review, 49(1), pp. 56-74.
  40. Froot K.A., Scharfstein D.S., Stein J. C. (1993), Risk management: Coordinating corporate investment and financing policies, The Journal of Finance, 48(5), pp. 629-1658.
  41. Kreiser P., Marino L.D., Dickson P., Mark Weaver K. (2010), Cultural influences on entrepreneurial orientation: The impact of national culture on risk taking and proactiveness in SMEs, Entrep. Theory Pract, 34, pp. 959-983.
  42. Kumar S., Baishya K., Sreen N., Sadarangani P.H., Samalia H.V. (2021), Impact of national culture on e-government development: A longitudinal study, Journal of Global Information Management, 29(2), pp. 1-22.
  43. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., and Vishny R.W. (1998), Law and finance. Journal of Political Economy, 106(6), pp. 1113-1155.
  44. Lechner P., Gatzert N. (2017), Determinants and value of enterprise risk management: empirical evidence from Germany, The European Journal of Finance, 24, pp. 1-27. DOI: 10.1080/1351847X.2017.1347100
  45. Li J., Harrison J.R. (2008), National culture and the composition and leadership structure of boards of directors. Corporate Governance: An International Review, 16(5), pp. 375-385.
  46. Li K., Griffin D., Yue H., Zhao L. (2013), How does culture influence corporate risk-taking?, Journal of Corporate Finance, 23, pp. 1-22.
  47. Li Y., Zahra S.A. (2012), Formal institutions, culture, and venture capital activity: A cross-country analysis, Journal of Business Venturing, 27(1), pp. 95-111.
  48. Liebenberg A., Hoyt R. (2003), The determinants of enterprise risk management: Evidence from the appointment of chief risk officers, Risk Management and Insurance Review, 6. DOI: 10.1111/1098-1616.00019
  49. Louisot J.P., Ketcham C.H. (2014), ERM-enterprise risk management: Issues and cases, John Wiley and Sons.
  50. Lucchese M., Sannino G., Tartaglia Polcini P. (2020), Il risk management approach nelle Università italiane: prime riflessioni su vincoli e opportunità, Management Control, 1, pp. 111-136. DOI: 10.3280/MACO2020-001006
  51. Lundqvist S. A., Vilhelmsson A. (2018), Enterprise risk management and default risk: Evidence from the banking industry, Journal of Risk and Insurance, 85(1), pp. 127-157.
  52. Mafrolla E., Matozza F. (2014), Risk management and firm size: a survey of Italian private companies. Management Control, 3, pp. 93-114. DOI: 10.3280/MACO2014-003005
  53. Markus H. R., Kitayama S. (1991), Culture and the self: Implications for cognition, emotion, and motivation. Psychological Review, 98, pp. 224-253.
  54. Maxwell J. (2008), Ratings agencies Eye ERM for all industries. Financial Executive, 24(2), pp. 44-47.
  55. McNally J.S., Tophoff V.H. (2014), Leveraging effective risk management and internal control, Strategic Finance, pp. 29-36.
  56. McShane M.K., Nair A., Rustambekov E. (2011), Does enterprise risk management increase firm value?, Journal of Accounting, Auditing and Finance, 26, pp. 641-658.
  57. Meulbroek L. (2002), The promise and challenge of integrated risk management. Risk Management and Insurance Review, 5(1), pp. 55.
  58. Mihet R. (2013), Effects of culture on firm risk-taking: A cross-country and cross-industry analysis, Journal of Cultural Economics, 37(1), pp. 109-151.
  59. KPMG (2009), Never again? Risk management in banking beyond the credit crisis. -- https://www.cover.co.za/never-again-risk-management-in-banking-beyond-the-credit-crisis/.
  60. Klein A. (2002), Audit committee, board of director characteristics, and earnings management, Journal of Accounting and Economics, 33(3), pp. 375-400.
  61. Kim C.H., Amaeshi K., Harris S., Suh C. J. (2013), CSR and the national institutional context: The case of South Korea, Journal of Business Research, 66(12), pp. 2581-2591.
  62. Karolyi G. A. (2016), The gravity of culture for finance, Journal of Corporate Finance, 41, pp. 610-625.
  63. Kanagaretnam K., Lim C.Y., Lobo G.J. (2011), Effects of national culture on earnings quality of banks. Journal of International Business Studies, 42, pp. 853-874.
  64. Jean-Jules J., Vicente R. (2021), Rethinking the implementation of enterprise risk management (ERM) as a socio-technical challenge. Journal of Risk Research, 24(2), pp. 247-266.
  65. Illiashenko P., Laidroo L. (2020), National culture and bank risk-taking: Contradictory case of individualism, Research in International Business and Finance, 51, 101069.
  66. Hoyt R.E., Liebenberg A. P. (2011), The value of enterprise risk management, Journal of Risk and Insurance, 78, pp. 795-822.
  67. Hofstede G., Bond M.H. (1988), The Confucius connection: From cultural roots to economic growth. Organizational dynamics, 16(4), pp. 5-21.
  68. Hofstede G. (2011). Dimensionalizing cultures: The Hofstede model in context, Online Readings in Psychology and Culture, 2(1), pp. 1-26.
  69. Hofstede G. (2010). National cultural dimensions, pp. 2-7.
  70. Hofstede G. (2001), Culture’s consequences: Comparing values, behaviors, institutions and organizations across nations, Sage Publications.
  71. Hofstede G. (1991), Cultures and organizations: Software of the mind, Berkshire, England, McGraw-Hill.
  72. Hodgetts R.M., Luthans F., Doh J.P. (2006), International Management: Culture, Strategy and Behaviour, Mc Graw-Hill, New York, NY.
  73. Heine S.J., Lehman D.R., Markus H.R., Kitayama S. (1999), Is there a universal need for positive self‐regard?, Psychological Review, 106, pp. 766-794.
  74. Han S., Kang T., Salter S., Yoo Y.K. (2010), A cross‐country study on the effects of national culture on earnings management, Journal of International Business Studies, 41, pp. 123-141.
  75. Guo J., Marsh H.W., Parker P.D., Dicke T. (2018), Cross-cultural generalizability of social and dimensional comparison effects on reading, math, and science self-concepts for primary school students using the combined PIRLS and TIMSS data, Learning and Instruction, 58, pp. 210-219.
  76. Greco G., Marchi L. (2019), Nuove prospettive su governnace, audit, risk e performance management (a cura di), Studi e ricerche di economia aziendale.
  77. Gordon L.A., Loeb M.P., Tseng C.Y. (2009), Enterprise risk management and firm performance: A contingency perspective, Journal of Accounting and Public Policy, 28(4), pp. 301-327.
  78. Goolaup S., Ismayilov T. (2012), The influence of power distance on leadership behaviours and styles: Case studies of Japanese and French companies operating in Sweden.
  79. Gibilaro L., Mattarocci G. (2011), Ricing policies and customers’ portfolio concentration for rating agencies: Evidence from Fitch, Moody’s and Sand P. Academy of Banking Studies Journal, 10(1).
  80. Gatzert N., Martin M. (2015), Determinants and value of enterprise risk management: Empirical evidence from the literature, Risk Management and Insurance Review, 18(1), pp. 29-53.
  81. Shane S. (1992), Why do some societies invent more than others?, Journal of Business Venturing, 7, pp. 29-46.
  82. Shao L., Kwok C. C. Y., Zhang R. (2013). National culture and corporate investment. Journal of International Business Studies, 44, pp. 745-763.
  83. Soliman A., Mukhtar A. (2017), Enterprise risk management and firm performance: an integrated model for the banking sector, Banks and Bank Systems.
  84. Standard & Poor’s (2019), Enterprise risk management evaluation.
  85. Subramaniam N., McManus L., Zhang J. (2009), Corporate governance, firm characteristics and risk management committee formation in Australian companies, Managerial Auditing Journal.
  86. Van den Steen E. J. (2004), Rational overoptimism (and other biases), American Economic Review, 94, pp. 1141-1151.
  87. Yatim P. (2010), Board structures and the establishment of a risk management committee by Malaysian listed firms, Journal of Management and Governance, 14(1), pp. 17-36.
  88. Gallén M.L., Peraita C. (2018), The effects of national culture on corporate social responsibility disclosure: A cross-country comparison, Applied Economics, 50(27), pp. 2967-2979.
  89. Gaganis C., Pasiouras F., Wohlschlegel A. (2021), Allocating supervisory responsibilities to central bankers: Does national culture matter?. International Review of Law and Economics, 67, 105991.
  90. Mikes A., Kaplan R.S. (2013), Towards a contingency theory of enterprise risk management. -- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2311293.
  91. Moody’s (2004), Moody’s findings on corporate governance in the United States and Canada: August 2003-September 2004.
  92. Moody’s (2020), Understanding Moody’s Credit Ratings.
  93. Mourouzidou-Damtsa S., Milidonis A., Stathopoulos K. (2019), National culture and bank risk-taking, Journal of Financial Stability, 40, pp. 132-143.
  94. Nakata C and Sivakumar K. (1996), National culture and new product development: An integrative review. Journal of Marketing, 60, pp. 61-72.
  95. Nguyen D.D., Nguyen L., Sila V. (2019), Does corporate culture affect bank risk-taking? Evidence from loan-level data, British Journal of Management, 30, pp. 106-133.
  96. North, D. C. (1990). A transaction cost theory of politics. Journal of Theoretical Politics, 2(4), pp. 355-367.
  97. Pagach D., Warr R. (2011), The characteristics of firms that hire chief risk officers. Journal of Risk and Insurance, 78, pp. 185-211.
  98. Park H., Russell C., Lee J. (2007), National culture and environmental sustainability: A cross-national analysis, Journal of Economics and Finance, 31(1), pp. 104-121.
  99. Pavan A. (2019), Controllo interno e di gestione nella prospettiva del valore, Management Control, Editoriale, Suppl. 1, pp. 5-12. DOI: 10.3280/MACO2019-SU1001
  100. Penrose L.S. (1959), Self-reproducing machines, Scientific American, 200(6), pp. 105-117.
  101. Pillay S., Dorasamy N. (2010), Linking cultural dimensions with the nature of corruption: An institutional theory perspective, International Journal of Cross-cultural Management, 10(3), 363-378.
  102. Presti C., Mancini D. (2020). Il risk management e i social media: un’analisi della loro relazione in letteratura, Management Control, 2, pp. 155-178. DOI: 10.3280/MACO2020-002008
  103. Protiviti Inc. (2006). Guide to enterprise risk management: Frequently asked questions. -- http://www.ucop.edu/enterprise-risk-management/_files/protiviti_faqguide.pdf
  104. Ren H., Gray B. (2009), Repairing relationship conflict: How violation types and culture influence the effectiveness of restoration rituals, Academy of Management Review, 34(1), pp. 105-126.
  105. Ringov D., Zollo M. (2007), The impact of national culture on corporate social performance, Corporate Governance: The International Journal of Business in Society.
  106. Saeidi P., Saeidi S.P., Sofian S., Saeidi S.P., Nilashi M., Mardani A. (2019), The impact of enterprise risk management on competitive advantage by moderating role of information technology. Computer Standards and Interfaces, 63, pp. 67-82.
  107. Schwartz S.H. (1994), Beyond individualism and collectivism: New cultural dimensions of values, in H.C. Triandis, U. Kim, C. Kagitcibasi, S.C. Choi and G. Yoon (eds.) Individualism and collectivism: Theory, method and applications. Sage: Newbury Park, CA, pp. 85-1.
  108. Scott W.R. (2008), Approaching adulthood: The maturing of institutional theory, Theory and society, 37(5), pp. 427-442.
  109. Security and Exchange Commission (2010), Proxy disclosure enhancements (17 CFR PARTS 229, 239, 240, 249 and 274, Release Nos. 33-9089, 34-61175, IC-29092). Washington, DC: Author.
  110. Sekerci N. (2015), Does enterprise risk management create value for firms? In The Routledge Companion to Strategic Risk Management (pp. 409-440). Routledge.
  111. Shahrour M.H. (2020), Linking national culture to firm default risk: International evidence. Available at SSRN 3766784.

Alessandra Allini, Raffaela Casciello, Marco Maffei, Martina Prisco, The national culture as a determinant of ERM quality: Empirical evidence in the European banking context in "MANAGEMENT CONTROL" 1/2022, pp 79-102, DOI: 10.3280/MACO2022-001006