Language Similarity and M&A Transactions

European Accounting Review, Forthcoming.

45 Pages Posted: 29 Aug 2022

See all articles by Xiaofei Pan

Xiaofei Pan

University of Wollongong

Jin Zhang

Monash University

Date Written: August 16, 2022


We investigate how language similarity between acquirers and targets affects post-M&A performance using a large sample of M&A transactions in China. We hypothesize and find that acquirers achieve higher post-M&A operating performance when they acquire targets that share the same native languages. We provide evidence that language similarity enhances post-M&A performance via the communication channel. Additionally, we show that the impact of language similarity is more pronounced when acquirers are not controlled by government agencies and when they are not related parties of targets. This study indicates an important role of native language similarity on post-M&A performance.

Keywords: language similarity, M&A, information asymmetry, integration efficiency

JEL Classification: G14, G34, Z13

Suggested Citation

Pan, Xiaofei and Zhang, Jin, Language Similarity and M&A Transactions (August 16, 2022). European Accounting Review, Forthcoming., Available at SSRN:

Xiaofei Pan

University of Wollongong ( email )

Northfields Avenue
Wollongong, New South Wales 2522

Jin Zhang (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800

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