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Journal articles

Does Target Country Cultural Orientation Influence M&A?

Abstract : We examine whether the cultural orientation of target firms influences the outcomes of international mergers and acquisitions (M&As). Prior research shows that the national culture of the acquiring firm country influences M&As, as well as the distance between the acquiring and target country cultures. Not previously studied from a cultural perspective of M&As has been the target country culture, despite estimates that about 40% of M&As are target-initiated. Our focus is on target firm cultural orientation, including how cultural orientation affects the likelihood of, and returns from, M&As. Our testing applies three cultural orientation factors (results, tradition and people orientation) extracted from a GLOBE cultural framework to a dataset of firm-level M&A data across 39 countries, in 1990–2016. We find that firms from cultures with a results orientation are less likely to become M&A targets and also experience higher cumulative abnormal returns if acquired, while firms from countries with cultures with a tradition orientation or a people orientation are more likely to become targets but experience lower cumulative abnormal returns if acquired. These results are robust to a comprehensive range of robustness tests. Our findings suggest that understanding the cultural orientation of target firms is important to understanding M&A outcomes.
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Contributor : Steven Gouin Connect in order to contact the contributor
Submitted on : Thursday, June 16, 2022 - 1:12:05 PM
Last modification on : Friday, June 17, 2022 - 3:04:04 AM




Muhammad Farooq Ahmad, Saqib Aziz, Michael Dowling. Does Target Country Cultural Orientation Influence M&A?. British Journal of Management, Wiley, 2022, 33 (2), pp.906-938. ⟨10.1111/1467-8551.12462⟩. ⟨hal-03696970⟩



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