Cultural Distance And Cross-Border M&A Performance Of Chinese Listed Firms

With the implementation of China’s "Go Global" and "One Belt,One Road" policies,more and more enterprises are choosing cross-border M&A to explore overseas markets.Contrary to the increasing trend of cross-border M&A,the overall performance of cross-border M&A in China is not satisfactory.Cultural differences between home and host countries are the main reason for this phenomenon.Therefore,it is of theoretical and practical significance to study the relationship between cultural differences and cross-border M&A performance and whether there are moderating factors in it.This paper proposes five hypotheses based on the theoretical foundations of outsider disadvantage theory and cross-cultural management.A sample of 231 cross-border M&A events from 2006-2017 in the Thomson Global M&A Database is selected to investigate the relationship between cultural distance and cross-border M&A performance and how this relationship is moderated by firm nature and overseas M&A experience.It is found that cultural differences between countries significantly and negatively affect cross-border M&A performance when firms conduct overseas M&A.Based on this,the nature of the host SOE and overseas M&A experience serve as moderating factors to weaken this negative effect.To further expand the depth of the study,the host countries are grouped according to their degree of development and whether they are along the "Belt and Road" route.The following conclusions are drawn:(1)The negative impact of cultural distance on cross-border M&A performance is significantly greater in the group of developed countries than in the group of developing countries according to the degree of development of the host country.(2)According to the grouping regression of whether or not the country is along the "Belt and Road",the negative impact of cultural distance on the cross-border M&A performance of Chinese enterprises is significantly smaller than that of non-"Belt and Road" countries.The negative impact of cultural distance on the cross-border M&A performance of Chinese firms is significantly smaller than that of non-Belt and Road countries.The similar degree of development and mutually beneficial bilateral policies among developing countries as well as frequent cultural exchanges are the main reasons for the above results.Based on the above findings,this paper proposes the following recommendations from the perspectives of enterprises and countries respectively:(1)when enterprises conduct cross-border M&As,they should pay more attention to the cultural distance between the two countries and reasonably choose the cultural integration mode;make full use of the preferential policies brought by the government endorsement of state-owned enterprises to effectively reduce M&A costs and improve cross-border M&A performance;in addition,enterprises should seize the opportunity of large-scale In addition,enterprises should seize the opportunity of large-scale "sea turtles" returning to China for employment,hire talents with relevant overseas backgrounds,and accumulate overseas M&A experience to build a professional M&A team;(2)China should strengthen the implementation of mutually beneficial policies with countries along the "Belt and Road";and improve M&A performance by conducting the country should strengthen the implementation of mutually beneficial policies with the countries along the "Belt and Road",and improve the favorability of the host country through cultural exchange activities with developed countries to reduce the negative impact of cultural distance on cross-border M&A performance.