The effects of cultural differences on M&A performance - an "emerging" and "advanced" perspective

Abstract

The relationship between cultural differences and M&A performance is a topic for discussion. Cultural differences affect M&A performance negatively, or positively. However, recent literature shows that the internationalization process of acquirers from ‘advanced’ markets is significantly different from acquirers from ‘emerging’ markets. These differences can lead to different ex-post M&A performance. This thesis tests this proposition on an aggregate level, after examining the main effects of cultural distance on M&A performance where cultural distance is operationalized in three distinguished ways. A sample of 4,695 unique deals is analyzed through OLS and random effects regressions to shed light on the relationship between cultural differences and M&A performance. Empirical evidence is indeed available for the hypothesis that cultural differences relate differently to M&A performance for ‘advanced’ and ‘emerging’ acquirers.