The Effect of Cultural Distance Between Acquiring and Target Companies and the Innovation Output of Acquiring Companies on Cross-Border Mergers & Acquisitions Performance
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2024-06-27
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en
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This Master thesis researched the impact of Cultural Distance and Innovation Output on the performance of cross-border Mergers and Acquisitions (M&A’s). To do so, a dataset of 1.337 M&As has been constructed and used to determine how the Cumulative Abnormal Returns (CARs) have been affected by Cultural Distance and Innovation Output over the short (one year) and long (three years) term. The findings, controlled for the control variables of Firm Age, number of Employees and Tobin’s Q, show that Cultural Distance has a positive significant effect on short-term M&A Performance with a significance threshold of a P-value of 0,1, with every increase in Cultural Distance leading to an increase of 0,750 in CAR. In contrast, Cultural Distance has not shown to significantly impact the long-term CAR, although the effect size is larger (1,762). Innovation Output do not show to have a significant impact on M&A Performance in either the long or short term. The analysis shows that while Acquiring innovative Targets could theoretically enhance an Acquirer’s technological base, this effect has not seemed to translate into significant performance gains within the observed periods and observations. The results contribute to the literature by highlighting the effects of Cultural Distance and Innovation Output on M&A Performance, with importance on short- and long-term effects. The findings mention a need for further research into potential factors influencing cross-border M&A Performance.
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Faculteit der Managementwetenschappen