Cultural Differences And Cross-Border M&As Performance Of Chinese Enterprises

Cross-border mergers and acquisitions is the shortcut for Chinese enterprises to integrate the resources of globalization, rapidly promote the ability of researching and developing high technology, and learn the advanced experience of developed countries’firms. On traditional view, cultural differences are considered as the biggest reason for the failure of cross-border mergers and acquisitions of corporate, which make a lot of Chinese enterprises, lose the courage to go out of the country for globalization of business. However, many foreign scholars’ researches show that the existence of cultural differences will bring new knowledge, practices and skills to acquiring firms, which can promote the performance of firm. And some other influential factors like as M&A experience, industry relatedness between acquiring firms and acquired firms, trust degree to the acquired firms and so on, can moderate the size or even the direction of the influence that cultural differences to the performance of cross-border mergers and acquisitions of enterprises. Therefore, we hope that through empirical research methods to examine how cultural differences influence the performance of cross-border mergers and acquisitions of Chinese enterprises. At the same time, on this basis, we examine the moderating role of other factors on the relationship between cultural differences and performance. Thus, the research conclusions can provide some reference value for Chinese enterprises to make investment and integration strategy on cross-border mergers and acquisitions.Firstly, from a theoretical perspective, we analyze the reasons why cultural differences can have a negative impact, or a positive impact, or doesn’t have significant impact on the performance of cross-border mergers and acquisitions of enterprises. Then, we present some factors which may have moderating role on the relationship between cultural differences and performance and analyze their impact mechanism. Secondly, we conduct the empirical analysis based on119events of cross-border mergers and acquisitions of Chinese enterprises from the years1995-2008. The performance of cross-border mergers and acquisitions is using the method of buy-and-hold abnormal return (BHAR) to calculate, and cultural differences’calculation is based on the Hofstede’s four-dimensional model of national cultural differences. We comprehensively examine cultural differences’direct impact on corporate cross-border mergers and acquisitions after1-year,2-year and3-year performance. After that, we also examine the other factors’moderating role through hierarchical regression analysis and subgroup regression analysis. Through empirical analysis, we find that in the long run, the cultural differences showed a positive impact on the performance of cross-border mergers and acquisitions of Chinese enterprises. And the measuring time of performance, relative size between acquiring firms and acquired firms, M&A experience and industry relatedness between acquiring firms and acquired firms can have moderating role on the influence of cultural differences. At last, according to the research conclusions, we provide some suggestions for government and corporate. We hope there are more Chinese enterprises going out of country to make overseas mergers and acquisitions.The innovation of this paper is that through the empirical analysis, we comprehensively examine cultural differences’ direct impact on corporate cross-border mergers and acquisitions after1-year,2-year and3-year performance. At the same time, on this basis, we also examine several factors’moderating role. And because the sample of this paper have large time span and sample size, the conclusions become more persuasive.