Trust asymmetry and cross-border merger withdrawals: a global perspective

Muhammad Ahmad, Saqib Aziz (), Rwan El-Khatib and Duc Nguyen
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Muhammad Ahmad: SKEMA Business School
Saqib Aziz: Rennes SB - Rennes School of Business
Rwan El-Khatib: Zayed University
Duc Nguyen: VSE - Prague University of Economics and Business, Department of Land Economy, University of Cambridge

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Abstract: We empirically examine how trust asymmetry between countries can impact the cross-border merger outcome. Differing trust perceptions between acquirer and target countries can increase the complexities of deal negotiations and integration, constraining the successful deal completion and outcome. We find, in a comprehensive global sample of 56 countries spanning 37 years, that higher trust asymmetries between the acquirer and target countries significantly increases the cross-border merger withdrawal intensity and reduces the expected synergy gains. Moreover, the adverse effects of trust asymmetry are significantly attenuated by the quality of institutions in both countries. Our results hold after employing various empirical techniques to address endogeneity, omitted variable bias, and reverse causality. Overall, this study highlights the importance of trust asymmetry in shaping global economic outcomes.

Keywords: Cross-border mergers; Trust asymmetry; Culture; Withdrawn mergers; Global (search for similar items in EconPapers)
Date: 2026-06
Note: View the original document on HAL open archive server: https://hal.science/hal-05601230v1
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Published in Journal of International Financial Markets, Institutions and Money, 2026, 109, ⟨10.1016/j.intfin.2026.102337⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05601230

DOI: 10.1016/j.intfin.2026.102337

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