Abstract

http://ssrn.com/abstract=1545514
 
 

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Lost in Translation? The Effect of Cultural Values on Mergers Around the World


Kenneth R. Ahern


University of Southern California - Marshall School of Business

Daniele Daminelli


Politecnico di Milano - Department of Management, Economics and Industrial Engineering

Cesare Fracassi


University of Texas at Austin

January 17, 2012

Journal of Financial Economics (JFE), Forthcoming

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.

Number of Pages in PDF File: 59

Keywords: Mergers & Acquisitions, Culture, Trust, Hierarchy, Individualism, Egalitarianism, International, Cross-border

JEL Classification: G34, M14, Z1

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Date posted: February 1, 2010 ; Last revised: June 5, 2013

Suggested Citation

Ahern, Kenneth R. and Daminelli, Daniele and Fracassi, Cesare, Lost in Translation? The Effect of Cultural Values on Mergers Around the World (January 17, 2012). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: http://ssrn.com/abstract=1545514 or http://dx.doi.org/10.2139/ssrn.1545514

Contact Information

Kenneth Robinson Ahern (Contact Author)
University of Southern California - Marshall School of Business ( email )
701 Exposition Blvd
Los Angeles, CA 90089
United States
HOME PAGE: http://www-bcf.usc.edu/~kahern/
Daniele Daminelli
Politecnico di Milano - Department of Management, Economics and Industrial Engineering ( email )
Via Lambruschini 4
Milan, 20156
Italy
+39 0223992805 (Phone)
Cesare Fracassi
University of Texas at Austin ( email )
Red McCombs School of Business
1 University Station B660
Austin, TX 78712
United States
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