Cultural Values, CEO Risk Aversion and Corporate Takeovers

Thorsten Lehnert, Bart Frijn (), Aaron Gilbert and Alireza Tourani-Rad
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Bart Frijn: AUT University, NZ
Authors registered in the RePEc Author Service: Bart Frijns

LSF Research Working Paper Series from Luxembourg School of Finance, University of Luxembourg

Abstract: We explicitly examine the role of culture in corporate takeover decisions. Prior research suggests that the risk aversion of CEOs affects their takeover decisions. In this paper, we argue that managerial risk aversion at a national level is a cultural trait and affects the net synergies. CEOs of firms located in countries with higher level of risk aversion, measured by Hofstede’s (2001) uncertainty avoidance score, show less takeover activity, engage more in diversifying takeovers and require higher premiums on takeovers. Required net synergies are higher for smaller firms, relatively larger deals, and for firms that engage in more takeover activity. "Keywords: Financial Decision Making; Risk Aversion; Synergies; Culture; Takeovers." "Classification-JEL: D81; G34; M14."

Date: 2011
New Economics Papers: this item is included in nep-bec and nep-upt
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Citations: View citations in EconPapers (3)

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