A Survey of Culture and Finance

Over the past years an interest in Culture has increased among financial scholars. We provide a survey using financial research-articles with an explicit focus on Culture and relying on a systematic screening of 21 academic journals in Finance and beyond. While we can identify three financial topics at large, we note an overwhelming diversity of approaches in the way culture is conceptualized and operationalized, when the issue is not simply shunned. We stress a number of directions in which culture-research in Finance can be extended further, including richer conceptualizations of culture, further consideration of existing wisdom from adjacent disciplines, greater reliance on qualitative evidence and further investigation on the consequences of embededdness in Finance, each of which provides ground for surveys, and theoretical developments. Our main contributions are threefold. We underline the importance of disciplinary inbreeding in the way culture is operationalized in financial research today; the current methodological toolkit, embedded in the neoclassical paradigm (Brennan, 1995), may be insufficient to deal effectively with culture processes. Further venues may need to adapt the mainstream methodological toolkit accordingly. Second we suggest implementing backward definitions of culture with reliance on groups’ characteristics and conceptualization of culture-finance mechanisms rather than departing from “what culture is” (or should be). Last, we attract attention to complementarities and divergences with Behavioral Finance. In particular cultureresearch presumes varying forms of rationality; its focus on collective norms should provide an interesting angle of approach for future research, complementary to that of Behavioral Finance. Overall, it may be no coincidence if a culture interest is rising at a time Zingales (2000) calls for a re-foundation. Key-words: Finance. Culture. National Culture. Institutional Context. Law and Finance. Governance systems. Comparative Thinking. Theory-Method intersection. Epistemology. Behavioral Finance. JEL Classification: B4, B5, F3, G3. EFM Classification 150 Corporate Governance 120 Behavioural Issues ‡ ESCP Europe & Université de Paris Ouest (CEROS) [email protected] Correspondence at ESCP Europe, to the hands of M.-A. Lannerey, Dean’s office, 79, avenue de la République , France-75543 Paris cedex 11 . Pesonal Phone number: +33 (0)6 99 29 45 13. This paper has benefited from useful comments provided by seminar participants of the Finance seminar series ESCP-EAP, European School of Management, as well as CEROS (Université de Paris X) and FARGO (Université de Dijon). My special thanks to ESCP-EAP PhDs, to F. Bancel, P. Baubeau, P. Bunkanwanicha, J-P. Bouilloud, G. Charreaux, P. Dessertine, M. Guillén, C. Kobrak, C. Moussu, P. Spieser, M. Statman, C. Thibierge, B. Thiry, an editor of the Journal of International Business Studies as well as to the reviewers for the following conferences (2009): AFFI Spring, FMA, gdRE & Infiniti conferences.