Mergers and Acquisitions Across Cultures

We examine the effect of acquirer country culture on the cross-cultural (as opposed to cross-border) acquisition decision, the influence of social integration on this cross-cultural decision and the effect of the acquirer's culture on bid premium and probability of deal completion. We classify acquirer and target countries into GLOBE culture clusters. Sedulity-oriented and tradition-oriented cultures are less likely to acquire outside their home culture cluster, and greater social integration between acquirer and target countries mitigates this reluctance. Sedulity (tradition) oriented cultures pay lower (higher) bid premiums in cross-cultural transactions and are more (less) likely to complete them.