Cultural distance and value creation of cross-border M&A: The moderating role of acquirer characteristics

Boateng, Agyenim; Du, Min; Bi, XiaoGang; Lodorfos, George

Abstract

This paper examines the effects of culture and the interaction between cultural distance and salient acquirer characteristics on value creation of acquiring firms based on a sample of 209 firms over the period of 1998–2012. The findings indicate that Chinese acquirer experience wealth gains ranging from 0.45%–1.49% over a 10 day event window. We find cultural distance to exert a negative influence on value creation of acquirers in the short-and long-term. However, the negative returns are significant only in the short-term but not in the long-term. Further evidence shows that acquirer large size, prior experience and high Tobin's q positively moderate the link between cultural distance and value creation. The results suggest that the effect of culture distance is conditioned by the acquirer size, prior experience and Tobin's q implying that acquirer resources and managerial capabilities are important in dealing with and overcoming cross-border mergers and acquisitions (CBM&A) cultural challenges.

Citation

Boateng, A., Du, M., Bi, X., & Lodorfos, G. (2019). Cultural distance and value creation of cross-border M&A: The moderating role of acquirer characteristics. International Review of Financial Analysis, 63, 285-295. https://doi.org/10.1016/j.irfa.2018.12.009

• Journal Article Type: Article
• Acceptance Date: Dec 22, 2018
• Online Publication Date: Dec 27, 2018
• Publication Date: 2019-05
• Deposit Date: Dec 10, 2021
• Journal: International Review of Financial Analysis
• Print ISSN: 1057-5219
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 63
• Pages: 285-295
• DOI: https://doi.org/10.1016/j.irfa.2018.12.009
• Public URL: http://researchrepository.napier.ac.uk/Output/2828593