The Influence of National Culture on Corporate Policy: Evidence from the Payment Method in International Mergers

Yogesh Chauhan, Chinmay Ghosh, Manju Jaiswal and Zizheng Zhao
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Yogesh Chauhan: Indian Institute Of Management–Raipur (IIM–Raipur), Chhattisgarh, India
Chinmay Ghosh: University of Connecticut, Storrs, Connecticut, U.S.A.
Manju Jaiswal: Indian Institute of Management–Calcutta (IIM–Calcutta), West Bengal, India
Zizheng Zhao: University of Connecticut, Storrs, Connecticut, U.S.A.

American Business Review, 2025, vol. 28, issue 2, 420-454

Abstract: We examine how informal institutions—specifically, national culture—shape the choice of payment methods in cross-border mergers and acquisitions (M&As). Our analysis reveals that acquirers from countries with high levels of individualism are less likely to finance acquisitions using stock. In contrast, acquirers from cultures with high uncertainty avoidance are more inclined to do so. Furthermore, the negative association between individualism and stock financing is more pronounced in transactions with greater anticipated synergy gains. These results are robust to a range of firm-level controls, country-specific factors, and alternative proxies for national culture.

Keywords: National Culture; Individualism; Uncertainty Avoidance; Choice of Payment; Mergers and Acquisitions (search for similar items in EconPapers)
JEL-codes: G34 M14 O16 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ambsrv:021855

DOI: 10.37625/abr.28.2.420-454

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