Journal article 220 views 52 downloads
Synergistic Gains and National Cultural Distance
,
Muhammad Shujahat ,
Tunyi Tunyi Abongeh ,
Mehmet Demirbag
Financial Markets, Institutions & Instruments
Swansea University Author:
Tunyi Tunyi Abongeh
-
PDF | Version of Record
© 2025 New York University Salomon Center. This is an open access article under the terms of the Creative Commons Attribution License.
Download (406.5KB)
DOI (Published version): 10.1111/fmii.70002
Abstract
Does national cultural distance create higher synergistic gains in cross-border mergers and acquisitions (CBMAs)? Existing research on the role of cultural distance suggests that cultural disparities destroy shareholders’ wealth. Using an international sample of CBMAs over 19 years, we document that...
| Published in: | Financial Markets, Institutions & Instruments |
|---|---|
| ISSN: | 0963-8008 1468-0416 |
| Published: |
Wiley
2025
|
| Online Access: |
Check full text
|
| URI: | https://cronfa.swan.ac.uk/Record/cronfa70237 |
| Abstract: |
Does national cultural distance create higher synergistic gains in cross-border mergers and acquisitions (CBMAs)? Existing research on the role of cultural distance suggests that cultural disparities destroy shareholders’ wealth. Using an international sample of CBMAs over 19 years, we document that synergistic gains increase by 1.75 percentage points with one standard deviation increase in cultural distance. Drawing from the organizational learning theory, we suggest that learning diverse cultural practices in the post-acquisition stage is a source of higher synergy gains. The positive association between cultural distance and synergies is more pronounced if the acquirer pays in stock and already has takeover experience. This suggests that better awareness of the target country's culture and risk management through stock payment are boundary conditions for higher gains. Overall, our results lead to the counter-intuitive finding that CBMAs between firms from countries with dissimilar cultures are not always valued as destructive but depend on how merging firms learn the cultural practices of one another and manage integration challenges. We offer practical implications for regulators and policymakers about how the international takeover market can serve as a vehicle for learning new cultural practices and increasing combined firm value. |
|---|---|
| Keywords: |
cross-border mergers and acquisitions; national cultural distance; organizational learning theory; stock payment; synergistic gains; takeover experience; G34; D40 |
| College: |
Faculty of Humanities and Social Sciences |