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

Agyenim Boateng, Min Du, XiaoGang Bi and George Lodorfos

International Review of Financial Analysis, 2019, vol. 63, issue C, 285-295

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.

Date: 2019
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:63:y:2019:i:c:p:285-295

DOI: 10.1016/j.irfa.2018.12.009

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