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

Kenneth R. Ahern, Daniele Daminelli, Cesare Fracassi

    Research output: Research - peer-reviewArticle

    • 82 Citations

    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.

    LanguageEnglish (US)
    Pages165-189
    Number of pages25
    JournalJournal of Financial Economics
    Volume117
    Issue number1
    DOIs
    StatePublished - Jul 1 2015

    Fingerprint

    Cultural values
    Mergers
    Individualism
    Cultural differences
    Cross-border mergers
    Synergy
    Cultural distance
    Fixed effects
    Time-varying
    Announcement returns
    Instrumental variables
    National cultures

    Keywords

    • Cross-border
    • Cultural values
    • International
    • Mergers & acquisitions
    • Trust

    ASJC Scopus subject areas

    • Accounting
    • Strategy and Management
    • Economics and Econometrics
    • Finance

    Cite this

    Lost in translation? The effect of cultural values on mergers around the world. / Ahern, Kenneth R.; Daminelli, Daniele; Fracassi, Cesare.

    In: Journal of Financial Economics, Vol. 117, No. 1, 01.07.2015, p. 165-189.

    Research output: Research - peer-reviewArticle

    Ahern, Kenneth R. ; Daminelli, Daniele ; Fracassi, Cesare. / Lost in translation? The effect of cultural values on mergers around the world. In: Journal of Financial Economics. 2015 ; Vol. 117, No. 1. pp. 165-189
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