Cultural distance and valuation of multinational corporations

Antia, Murad J.; Lin, Jianxun; Pantzalis, Christos

doi:10.1016/j.mulfin.2006.10.002

Cited by 33 publications

(23 citation statements)

References 12 publications

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“…Indeed the internationalization process can be more or less time-consuming, difficult and expensive depending on factors such as geographical, psychic or cultural distance and institutional constraints (Barkema, Bell, & Pennings, 1996;Boateng & Glaister, 2003;Luo & Tung, 2007). For instance, a large body of literature suggests that cultural distance is relevant to cross-border acquisition performance (Antia, Lin, & Pantzalis, 2007;Aybar & Ficici, 2009;Brock, 2005;He, Bin, & Chen, 2008;López-Duarte & Vidal-Suárez, 2010;Malhotra, Sivakumar, & Zhu, 2011;Morosini, 1998;Morosini, Shane, & Singh, 1998;Steigner & Sutton, 2011). Most MNEs use cross-border acquisitions as a fast and easy way to acquire strategic assets and enter new markets, but we argue that this ease of access is much greater for Indian bidders than for Chinese companies.…”

Section: Motives For Cross-border Mandasmentioning

confidence: 99%

“…Although this mode of entry is considered as being the quickest, easiest and most preferable means to access new marketing network and potential customers (Belderbos, 2003;Chen & Findlay, 2003;Deng, 2007;Deng, 2009;Li, 2007;Wang & Boateng, 2007), the process can be more or less difficult and expensive depending on firm-specific and country-specific (dis)advantages (Barkema, et al, 1996;Boateng & Glaister, 2003;Luo & Tung, 2007). The extant literature mentions the relevance of cultural distance in cross-border acquisition performance (Antia, et al, 2007;Aybar & Ficici, 2009;Brock, 2005;He, et al, 2008;López-Duarte & Vidal-Suárez, 2010;Malhotra, et al, 2011;Morosini, 1998;Morosini, et al, 1998;Steigner & Sutton, 2011). Indeed, cross-border acquisitions are subject to liabilities of foreignness (Zaheer, 1995) that can hinder the realization of intended synergies (Brock, 2005).…”

Section: Moderating Effect Of Cultural Distance On Fast Entrymentioning

confidence: 99%

See 1 more Smart Citation

The motives and performance of cross-border acquirers from emerging economies: Comparison between Chinese and Indian firms

Nicholson

Salaber

2013

International Business Review

168

155

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During the recent decade, the world has witnessed the rapid growth of MNEs from emerging economies. Their increasing participation in cross-border mergers and acquisitions has raised great attention in the extant literature. This study evaluates the value creation from these cross-border transactions from two representative emerging countries, namely China and India, and determines factors that result in the different performance of these international acquisition activities. Crossborder acquisitions conducted by these countries' companies indeed lead to significant shareholder wealth creation. Furthermore, Indian shareholders are more likely to benefit from deals in small cultural distance countries, while Chinese investors gain from the cross-border expansion of manufacturing companies. Location also affects the performance of cross-border acquisitions, with acquisitions into developed countries generating higher returns to shareholders. Our sample consists of 203 Indian and 63 Chinese cross-border deals over the period 2000-2010 and our results hold after controlling for various deal-level and firm-level characteristics.

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Section: Motives For Cross-border Mandasmentioning

confidence: 99%

Section: Moderating Effect Of Cultural Distance On Fast Entrymentioning

confidence: 99%

The motives and performance of cross-border acquirers from emerging economies: Comparison between Chinese and Indian firms

Nicholson

Salaber

2013

International Business Review

168

155

View full text Add to dashboard Cite

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“…To accomplish this task, governance_index and developed variables are regressed on UAI, MAS, and LTO and the residuals as orthogonal cultural variables are used to estimate models 4, 5, and 6 in Table 7. Chang and Noorbakhsh (2009) and Anita et al. (2007) use a similar methodology to estimate orthogonal cultural distance in their regression models.…”

Section: Empirical Analysismentioning

confidence: 99%

Does National Culture Influence the Firm’s Choice of Debt Maturity?*

Chang

Wee

2012

Asia-Pac J of Fin Stud

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Debt is an effective mechanism to mitigate agency costs in relieving manager–shareholder conflicts. Similarly, debt maturity choice allows the firm to discipline entrenched managers. In this paper we show cross‐country evidence that national culture, along with corporate governance factors, influences the lender’s (or the borrower’s) debt maturity choice. Uncertainty avoidance index, masculinity, and long‐term orientation indices are negatively related to overall debt maturity in a country. This implies that the risk‐averse lenders offer (or, borrowing firms use) short‐term debt when the surrounding economic environment becomes more uncertain and ambiguous. This is consistent with the extant literature that national culture plays a critical role in determining financing decisions in the presence of uncertainty and ambiguity. We argue that national culture is one of the last factors to influence the significant variation of debt maturities across firms in different countries. The relative effect of national culture and corporate governance on firms’ debt maturity selection depends on whether a country’s financial system is a bank‐based economy (e.g. Japan and Germany) or a market‐based economy (e.g. the US and the UK).

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“…The CDI index takes values between 1 and 0: a score close to 1 implies significant cultural proximity. See Antia, Lin and Pantzalis (2007) for the method of the construction of the cultural distance index (CDI)…”

Section: Country-specific Variablesmentioning

confidence: 99%