#07-10
Mars-Venus Marriages: Culture and Cross-Border M&A
Rajesh Chakrabarti, Narayanan Jayaraman, and Swastika Mukerjee, March 2006
Abstract: Analyzing cross-border acquisitions during the 1990’s, we find that contrary to general
perception, cross-border acquisitions perform better in the long-run if the acquirer and
the target come from countries that are culturally more disparate. We use the Hofstede
measure of cultural dimensions to measure cultural distance but also examine alternative
measures. The positive effect of cultural distance persists after controlling for several
deal-specific variables and country-level fixed effects, and is robust to alternative
specifications of long-term performance. Cash and friendly acquisitions tend to perform
better in the long-run. There is also some evidence of synergies when acquirers from
stronger corporate governance regimes acquire targets from weaker regimes.
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