Lost in translation? The effect of cultural values on mergers around the world

Kenneth Ahern, Daniele Daminelli and Cesare Fracassi

Journal of Financial Economics, 2015, vol. 117, issue 1, 165-189

Abstract: We find strong evidence that three key dimensions of national culture (trust, hierarchy, and individualism) affect merger volume and synergy gains. The volume of cross-border mergers is lower when countries are more culturally distant. In addition, greater cultural distance in trust and individualism leads to lower combined announcement returns. These findings are robust to year and country-level fixed effects, time-varying country-pair and deal-level variables, as well as instrumental variables for cultural differences based on genetic and somatic differences. The results are the first large-scale evidence that cultural differences have substantial impacts on multiple aspects of cross-border mergers.

Keywords: Mergers & acquisitions; Cultural values; Trust; International; Cross-border (search for similar items in EconPapers)
JEL-codes: G34 M14 Z1 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (317)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:117:y:2015:i:1:p:165-189

DOI: 10.1016/j.jfineco.2012.08.006

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