Corporate Culture and M&As: International Evidence from Corporate Social Responsibility

50 Pages Posted: 28 Aug 2018 Last revised: 18 Jun 2020

See all articles by George Alexandridis

George Alexandridis

ICMA Centre, Henley Business School

Andreas G. F. Hoepner

Smurfit Graduate Business School, University College Dublin; Stockholm School of Economics - Mistra Financial Systems (MFS); European Commission's Technical Expert Group for Sustainable Finance

Zhenyi Huang

Cass Business School, City University of London

Ioannis Oikonomou

University of Reading - ICMA Centre

Date Written: June 17, 2020

Abstract

We examine the role of corporate culture in M&As by utilizing a unique corporate social responsibility (CSR) dataset, providing in-depth information on multiple dimensions of organizational culture in 22 developed markets. In accordance with the prediction of the culture clash theory, a wider divergence between the corporate cultures of the acquiring and target firms is associated with lower acquirer announcement and long-run returns as well as synergistic gains for the combined firm. Cultural misalignment also increases the time required to consummate a deal and reduces the likelihood of deal completion and the percentage of stock payment. Our results are robust to alternative explanations (e.g. similarities in national culture, acquirer CSR performance), alternative regression specifications, and alternative cultural misalignment measures. Our findings highlight the importance of a deeper understanding of CSR for the target selection process, integration planning, and financing choice of M&As to corporations and their investors.

Keywords: Mergers and Acquisitions; CSR; Organizational Culture; Post-Merger Integration; Cross-Border M&As; Acquisition Gains

JEL Classification: G14; G34; M14

Suggested Citation

Alexandridis, George and Hoepner, Andreas G. F. and Huang, Zhenyi and Oikonomou, Ioannis, Corporate Culture and M&As: International Evidence from Corporate Social Responsibility (June 17, 2020). Available at SSRN: https://ssrn.com/abstract=3233616 or http://dx.doi.org/10.2139/ssrn.3233616

George Alexandridis

ICMA Centre, Henley Business School ( email )

Whiteknights Campus
P.O. Box 242
Reading, RG6 6BA
United Kingdom
+44 (0) 118 378 4387 (Phone)

Andreas G. F. Hoepner

Smurfit Graduate Business School, University College Dublin ( email )

Blackrock, Co. Dublin
Ireland

Stockholm School of Economics - Mistra Financial Systems (MFS) ( email )

MISUM
Box 6501, SE-113 83 Stockholm
Sweden

European Commission's Technical Expert Group for Sustainable Finance ( email )

2 Rue de Spa
Brussels, 1000
Belgium

Zhenyi Huang (Contact Author)

Cass Business School, City University of London ( email )

London, EC2Y 8HB
United Kingdom

Ioannis Oikonomou

University of Reading - ICMA Centre ( email )

Whiteknights Park
P.O. Box 242
Reading RG6 6BA
United Kingdom

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