The Influence Of Cultural Distance On The Performance Of Chinese Listed Companies’ Cross-border M&A

Since the 2008 financial crisis,with the strength of Chinese enterprises and the emergence of opportunities in the global M&A market,the number of cross-border M&A cases and single transaction volume of Chinese enterprises have been increasing year by year.Chinese listed companies,as the main force of this M&A boom,are widely concerned by the global investment market.For a long time,the influence of cultural factors on the performance of cross-border M&A has been an important issue of academic concern."Cultural distance" measures the cultural differences between the countries where the two parties are located.Both academia and the industry believe that cultural distance has a significant impact on the performance of cross-border M&A,but there is no consensus on the direction of its impact on the performance of cross-border M&A.Therefore,it is of great significance to analyze the influence of cultural distance on the cross-border M&A performance of Chinese listed companies.In this paper,298 cross-border M&A events of Chinese listed companies completed from 2009 to 2021 are selected from Zephyr and SDC M&A databases and taken as research samples.Firstly,event study method is used to measure and analyze M&A performance,and OLS regression model is constructed to test the impact of cultural distance on cross-border M&A performance of Chinese listed companies.This paper is divided into five chapters,the first chapter is the introduction,mainly from the research background,research significance,research content to clarify the value of this topic.The second chapter is a literature review.It first summarizes the connotation and measurement of cross-border M&A performance by predecessors,and then combs the theoretical basis of the influence of cultural distance on M&A performance by predecessors.The third chapter is the theoretical basis and research hypothesis of the influence of cultural distance on the performance of Chinese listed companies’ crossborder M&A.This paper adopts the analytical framework of "resource-based view" and "institution-based view".In the resource-based view,culture is regarded as a hidden resource that affects organizational cognition and action,and cultural distance is regarded as the source of heterogeneity and complementarity of the two parties in the merger and acquisition.In the institutional perspective,cultural distance is regarded as the cost of acquiring legitimacy in the host country.The fourth chapter is an empirical analysis of the impact of cultural distance on the performance of Chinese listed companies’ cross-border M&A.This chapter first measures the performance of Chinese listed companies’ cross-border M&A through the event study method,and then tests the impact of cultural distance on the performance of Chinese listed companies’ crossborder M&A with OLS regression model.The fifth chapter is the conclusion and policy suggestions.This chapter first analyzes and summarizes the empirical results based on basic theories,and then provides relevant policy suggestions for Chinese listed companies to improve the efficiency of M&A and avoid operational risks.This paper finds that cultural distance negatively affects the performance of Chinese listed companies’ cross-border M&A.The experience of the acquirer plays a u-shaped moderating effect on the impact of cultural distance on M&A performance.When the experience of the acquirer is small,the experience of the acquirer will increase the negative impact of cultural distance on M&A performance.This is mainly because in the early stage of experience accumulation,the abuse of the experience of the acquirer leads to the aggravation of cultural friction and the deterioration of M&A performance.When the acquirer has more experience,M&A experience will weaken the negative impact of cultural distance on M&A performance,mainly because the accumulation of experience eventually leads to the learning effect,and the effective use of experience promotes M&A performance.The absorption and integration ability of the acquirer is beneficial to reduce the negative impact of cultural distance on M&A performance.This paper measures the absorption and integration ability of the acquirer by four factors,namely,cross-cultural integration ability,technology absorption ability,resource correlation and resource complementarity.