Culture and earnings quality in cross-border acquisitions

Jagjit S. Saini, Gaurav Kumar and Jim P. DeMello

International Journal of Behavioural Accounting and Finance, 2021, vol. 6, issue 3, 189-208

Abstract: This paper examines the effect of culture on earnings quality following cross-border acquisitions using a sample of US public firms acquiring foreign firms. We find that, in general, the earnings quality of the US acquirer declines during the post-acquisition period in a cross-border acquisition of a foreign firm. In addition, we find that the culture of the foreign target impacts the earnings quality of the US acquirer during the post-acquisition period. Using the Hofstede's (1980) cultural dimensions, we specifically find that the degree of individualism and uncertainty avoidance prevalent within the target nation impact the earnings quality of the US acquirer.

Keywords: culture; earnings quality; individualism; uncertainty avoidance; cross-border acquisitions. (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbeaf:v:6:y:2021:i:3:p:189-208

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