Lost in translation? The effect of cultural values on mergers around the world

We find strong evidence that three key dimensions of national culture (trust, hierarchy, and individualism) affect merger volume and synergy gains. The volume of cross-border mergers is lower when countries are more culturally distant. In addition, greater cultural distance in trust and individualis...

Full description

Saved in:
Bibliographic Details
Published in:Journal of financial economics 2015-07, Vol.117 (1), p.165-189
Main Authors: Ahern, Kenneth R., Daminelli, Daniele, Fracassi, Cesare
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Cross border transactions
Cross-border
Cultural differences
Cultural values
Hierarchy
Individualism
International
Mergers & acquisitions
National culture
Rates of return
Studies
Translation
Trust
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We find strong evidence that three key dimensions of national culture (trust, hierarchy, and individualism) affect merger volume and synergy gains. The volume of cross-border mergers is lower when countries are more culturally distant. In addition, greater cultural distance in trust and individualism leads to lower combined announcement returns. These findings are robust to year and country-level fixed effects, time-varying country-pair and deal-level variables, as well as instrumental variables for cultural differences based on genetic and somatic differences. The results are the first large-scale evidence that cultural differences have substantial impacts on multiple aspects of cross-border mergers.
ISSN:0304-405X
1879-2774
DOI:10.1016/j.jfineco.2012.08.006