Does The Cultural Distance Of The Two Parties Affect The M&A Performance?

Corporate mergers and acquisitions are not only the expansion of corporate wealth,property and other material wealth,but also the integration of corporate culture,business objectives and other development concepts.Existing scholars explore the impact on M&A performance from the perspective of economic characteristics and strategic management of both parties,and lack of research on the analysis of M&A performance from a cultural perspective.Corporate culture can form an informal norm within the organization to compensate for incomplete contract design,thereby reducing agency costs.Conflicts between the acquirer and the target company may lead to mergers and acquisitions that fail to achieve the expected benefits.The cultural difference is an important factor to be considered.Whether the cultural distance between the acquirer and the target enterprise will have a significant impact on the M&A income is an issue that both academic and practical circles need to solve.This paper takes the equity mergers and acquisitions of listed companies in China in 2008-2017 as a sample.Firstly,by establishing an index system for measuring corporate culture,the factor analysis method is used to calculate the cultural scores of the acquired companies and target companies,and the cultural distance between the two parties is calculated.Then use empirical methods to study the impact of cultural distance on the acquirer's M&A income.The research results show that the greater the cultural distance between the acquirer and the target company,the worse the acquirer's M&A income will be;on the contrary,if the cultures of the two parties are similar,they can bring better benefits to the acquired company.On this basis,this paper starts from whether the acquirer is a state-owned enterprise,its region,the degree of credit of the acquirer and the proportion of the shares held by the acquirer after the merger,and further studies the influence of cultural distance on the M&A income under the above-mentioned transaction characteristics.It is found that when the acquirer is a state-owned enterprise or in the eastern region,it can offset the decline in the M&A income caused by the cultural distance to a certain extent.The higher the integrity of the acquirer,the higher the M&A income will be under the same cultural distance;The higher the shareholding ratio of the acquirer to the target company after the merger,the stronger the company with stronger cultural strength can assimilate the company with lower cultural intensity,thus reducing the impact of cultural distance on the M&A income.The conclusion of this paper is to show that the cultural differences have an important impact on the M&A income of the enterprise.The acquirer should pay attention to the problems brought by the cultural differences in the process of M&A and effectively guide and solve the problems.The effective integration of culture can make the M&A of the enterprise reach expected even better results.