Research On The Influence Of Regional Culture On Enterprises’hedging Decision

With the accelerating process of the global financial system integration,Chinese companies are increasingly feeling the pressure of various raw materials or product prices risks from the international financial market.The management of such risks becomes more and more urgent.In the process of the management of these risks,a large number of companies have adopted methods that use various financial derivatives as hedging instruments to avoid such risks.This has also led the academic field to pay more and more attention to the motivation research on corporate hedging.At present,the role of cultural and other soft factors in the formation of contemporary economic environment and financial system has increasingly been recognized by the academic field.Under such background,exploring the impact of culture on micro-enterprises’ decision-making processes is very important and necessary for the management and development of enterprises.Therefore,from the perspective of regional culture,this paper studies the impact of cultural differences between different provinces and regions on the decision-making processes of listed companies in China,especially on hedging decisions,and on this basis of the above studies,this paper then explores whether some special financial environments which means when financial difficulties occurs,the conflict between the emerging risk-shifting motivation and regional culture will affect its effect in the enterprises’decision-making processes.The main conclusions obtained in this paper are as follows:(1)Regional culture has a significant influence on the hedging decisions of listed companies in China,specifically as follows:There is a significant positive correlation between the degree of future orientation and uncertainty avoidance in the cultural dimensions and the hedging decisions of companies.That is,the higher the future orientation of regional culture and the greater the degree of avoidance of uncertainty,the more companies in the region will perform hedging operations to avoid the risks that may exist in the future;on the contrary,there is a significant negative correlation between the degree of reluctance in the cultural dimensions and the hedging operations of the companies,that is,if the culture of a region is more bullish,companies in the region tend not to perform hedging operations.(2)When companies face a special financial environment that facing a financial dilemma,the existence of a risk-shifting motivation does have a significant negative correlation with the company’s hedging operations.That is,companies that are financially distressed will have fewer hedging operations.Furthermore,the empirical results show that the risk-shifting motivation does affect the effect of regional culture on the process of corporate hedging decision-making.Specifically,it means when companies are trapped into financial difficulties,the significant correlation between regional culture and corporate hedging operations has changed a lot,due to the existence of risk-shifting motivations,that is to say,the management needs of the current financial problems make the regional culture no longer a major affecting-factor on corporate financial decision-making processes.The main research contributions and innovations of this paper lie in the following aspects:(1)There are still relatively large limitations in the study of the motivations of firms’ motivations to hedge,both at home and abroad.This paper innovatively studies the effect of culture in the decision-making processes of hedging strategy selection and it also provides empirical data support from listed companies in China;(2)Past researches on culture are mostly based on cross-country basis conducted using different countries as samples.This article innovatively studies all of one country-China.On the basis of the idea that significant cultural differences do exist between different provinces and regions,this paper studies the influence of regional culture on corporate behavioral decision-making.This study fills this gap and enriches the existing literature;(3)This paper discusses how the risk-shifting motivation will affect he relationship between regional culture and corporate hedging decision-making.Managers of companies with financial difficulties have incentives to transfer risks.This theory is generally accepted by the academic field.Based on the above research,this paper explores whether the existence of this motive will interfere with the role of regional culture in the enterprise decision-making process and expands the existing research.