Cultural distance and value creation of cross-border M&A: The moderating role of acquirer characteristics

Agyenim Boateng, Min Du, Xiao Gang Bi, George Lodorfos

Research output: Journal PublicationArticlepeer-review

15 Citations (Scopus)

Abstract

This paper examines the effects of culture and the interaction between cultural distance and salient acquirer characteristics on value creation of acquiring firms based on a sample of 209 firms over the period of 1998–2012. The findings indicate that Chinese acquirer experience wealth gains ranging from 0.45%–1.49% over a 10 day event window. We find cultural distance to exert a negative influence on value creation of acquirers in the short-and long-term. However, the negative returns are significant only in the short-term but not in the long-term. Further evidence shows that acquirer large size, prior experience and high Tobin's q positively moderate the link between cultural distance and value creation. The results suggest that the effect of culture distance is conditioned by the acquirer size, prior experience and Tobin's q implying that acquirer resources and managerial capabilities are important in dealing with and overcoming cross-border mergers and acquisitions (CBM&A)cultural challenges.

Original languageEnglish
Pages (from-to)285-295
Number of pages11
JournalInternational Review of Financial Analysis
Volume63
DOIs
Publication statusPublished - May 2019

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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