National culture and private benefits of control

Our paper examines the relationship between national culture and private benefits of control. We concentrate on the Hofstede dimensions and analyze their role for a range of instruments that directly relate to the private benefits of control. In this sense, our proxies reflect how power is distributed among shareholders indicating the potential a given shareholder has to extract private benefits. In a cross-country analysis of 36 countries, we show that power distance relates positively to the expropriation of private benefits of control, whereas individualism exhibits a negative relationship. Our results are statistically significant and robust to several alternative specifications.