Trust and cross-border mergers and acquisitions

Min Maung

International Review of Financial Analysis, 2022, vol. 83, issue C

Abstract: A number of studies suggest that social trust matters for investment. Using different measures of trust from World Values Survey, we show that countries where people display higher levels of trust engage in more cross-border M&A activities. When they do, these acquirers pay lower premiums. To the extent that these acquirers also tend to engage in larger acquisitions as well, our findings suggest that a larger selection pool of potential targets and higher value targets enable these acquirers to negotiate for lower premiums. We do not find evidence of the significant effect for target country trust levels. Hence, trust may benefit those acquiring firms in cross-border transactions.

Keywords: Trust; Trust in other nations; Trust in people; Cross-border mergers and acquisitions; Acquisition premium (search for similar items in EconPapers)
JEL-codes: F21 G10 G15 G34 G41 Z13 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:83:y:2022:i:c:s1057521922002204

DOI: 10.1016/j.irfa.2022.102262

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