National Culture, Managerial Preferences, and Takeover Performance

46 Pages Posted: 10 Nov 2011 Last revised: 20 May 2018

See all articles by Wolfgang Breuer

Wolfgang Breuer

RWTH Aachen University

Bushra Ghufran

Ecole Superieure Des Sciences Commerciales D'Angers (ESSCA)

Astrid Juliane Salzmann

Catholic University of Lille - IESEG School of Management; RWTH Aachen University - Department of Finance

Date Written: May 18, 2018

Abstract

We investigate the influence of managerial preferences proxied by national culture on takeover performance in a cross-disciplinary international study. To this end, we rely on the cultural dimensions according to Hofstede et al. (2010). Some managerial preferences are related to certain cultural features that may lead to the destruction of firm value in the long run. Using data on a cross-section of 53 countries and 32,856 M&A deals, we find that national culture is statistically significant in explaining different levels of takeover performance. Countries with high individualism and uncertainty avoidance scores appear to exhibit lower post-acquisition risk and stock price performance supporting the managerial entrenchment hypothesis. Masculinity, however, has a positive effect on relative deal size and the takeover outcomes implying that empire building is not observed to cast a negative impact on post-acquisition performance. Results are more pronounced in the case of domestic transactions and also for less globalized acquirer firms due to the absence of the interfering impact of cultural differences.

Keywords: cross-cultural research, cultural values, managerial preferences, mergers and acquisitions

JEL Classification: D03, D22, G02, G34, Z10

Suggested Citation

Breuer, Wolfgang and Ghufran, Bushra and Salzmann, Astrid Juliane, National Culture, Managerial Preferences, and Takeover Performance (May 18, 2018). Available at SSRN: https://ssrn.com/abstract=1957568 or http://dx.doi.org/10.2139/ssrn.1957568

Wolfgang Breuer

RWTH Aachen University ( email )

Templergraben 55
D-52056 Aachen, 52056
Germany

Bushra Ghufran

Ecole Superieure Des Sciences Commerciales D'Angers (ESSCA) ( email )

1 rue Joseph Lakanal
BP 40348
Angers Cedex, 49003
France

Astrid Juliane Salzmann (Contact Author)

Catholic University of Lille - IESEG School of Management ( email )

Socle de la Grande Arche
1 Parvis de la Defense
Puteaux, Paris 92800
France

RWTH Aachen University - Department of Finance ( email )

Templergraben 64
Aachen, 52056
Germany

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