How do each of the six dimensions of the Hofstede index influence M&A success?
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2025-07-03
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en
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Many businesses fail to improve firm performance after a merger or acquisitions. According to theory, cultural distance plays an important role. Cultural distance refers to differences in norms and beliefs between countries causing difficulties in the integration stage. Despite numerous studies the effect of cultural distance remains unclear. Moreover most studies focus on an index representing cultural distance while it’s also interesting to look at the effect of different components as this is most of the time overlooked. Also most studies focus on Western markets while other markets remain underexplored. Therefore this study focuses on Hofstede’s six cultural dimensions and their effect on M&A success using deals from both explored and underexplored markets. The study makes use of 347 deals where M&A success is measured using acquirer abnormal returns over a period of three months before the announcement and one month after completion. The results show that neither the overall cultural index nor its six dimensions separately have a statistically significant effect on abnormal returns during the time period. The study contributes to current literature by providing a more nuanced understanding of the immediate effect of cultural distance within previously underexplored markets.
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Faculteit der Managementwetenschappen