The Effect of Cultural Similarity on Mergers and Acquisitions: Evidence from Corporate Social Responsibility

74 Pages Posted: 21 Feb 2017 Last revised: 14 Oct 2018

See all articles by Frederick L. Bereskin

Frederick L. Bereskin

University of Missouri

Seong K. Byun

Virginia Commonwealth University (VCU) - Department of Finance, Insurance & Real Estate

Micah S. Officer

Loyola Marymount University - Department of Finance and Computer Information Systems

Jong-Min Oh

University of Central Florida (UCF) - Department of Finance

Date Written: June 29, 2017

Abstract

We study the effect of corporate cultural similarity on merger decisions and outcomes. Using the similarity in firms’ corporate social responsibility characteristics to proxy for cultural similarity, we find that culturally similar firms are more likely to merge. Moreover, these mergers are associated with greater synergies, superior long-run operating performance, and fewer write-offs of goodwill. Our evidence is consistent with the notion that cultural similarity eases post-deal integration. Our results contribute to the literature on the determinants of merger success, provide new evidence on the impact of corporate culture, and offer a new approach to defining firms’ cultural similarity.

Keywords: Mergers and acquisitions, Corporate culture, CSR

JEL Classification: G34, M14

Suggested Citation

Bereskin, Frederick L. and Byun, Seong K. and Officer, Micah S. and Oh, Jong-Min, The Effect of Cultural Similarity on Mergers and Acquisitions: Evidence from Corporate Social Responsibility (June 29, 2017). Journal of Financial and Quantitative Analysis (JFQA), Volume 53, Issue 5, pp. 1995-2039, 2018. Available at SSRN: https://ssrn.com/abstract=2920129 or http://dx.doi.org/10.2139/ssrn.2920129

Frederick L. Bereskin (Contact Author)

University of Missouri ( email )

Columbia, MO 65203
United States

Seong K. Byun

Virginia Commonwealth University (VCU) - Department of Finance, Insurance & Real Estate ( email )

Richmond, VA 23284
United States

Micah S. Officer

Loyola Marymount University - Department of Finance and Computer Information Systems ( email )

Los Angeles, CA 90045
United States

Jong-Min Oh

University of Central Florida (UCF) - Department of Finance ( email )

College of Business Administration
P.O. Box 161400
Orlando, FL 32816
United States

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