Trust and monitoring

Lesmeister, Simon; Limbach, Peter; Goergen, Marc

doi:10.1016/j.jbankfin.2022.106587

Cited by 8 publications

(2 citation statements)

References 62 publications

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“…We then calculate the absolute value of the score differences between the acquirer and target firm’s region, resulting in the variable of Trust . The literature suggested that trust reduces transaction costs and replaces supervision (Lesmeister et al. , 2022).…”

Section: Methodsmentioning

confidence: 99%

“…We then calculate the absolute value of the score differences between the acquirer and target firm's region, resulting in the variable of Trust. The literature suggested that trust reduces transaction costs and replaces supervision Stock market performance (Lesmeister et al, 2022). Greater cultural differences in trust lead to substantial differences in supervision, which negatively affect synergy.…”

Section: Econometric Modelmentioning

confidence: 99%

See 1 more Smart Citation

How do cultural differences affect stock market performance after mergers and acquisitions? Empirical evidence from China

Liu,

Xie,

Guan

2024

ARJ

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Purpose As cross-cultural mergers and acquisitions (M&A) have learning effects on organisations, assessing their impacts on corporate performance is crucial. This study aims to explore the impact of inter-firm cultural differences on long-term post-M&A stock market performance. Design/methodology/approach The authors select domestic M&A transactions of Chinese listed companies during 2010–2021 as the sample. Then, the authors use the partial least squares structural equation model (PLS-SEM) to construct the latent variable of cultural differences in four dimensions to explore long-term stock market performance. Findings Cultural differences first positively and then negatively impact post-M&A performance. Three transmissions mechanisms are identified: investor sentiment, takeover premiums and information disclosure quality. Further analysis reveals that acquirer stock performance improves with higher analyst coverage and non-local shareholders but worsens if there are business affiliations between the acquirer and target firms. Practical implications This study can help optimise information disclosure systems in M&A transactions for regulatory authorities and aid investors’ understanding of post-M&A performance changes. Furthermore, it can improve acquirers’ understanding of the risks and opportunities in cross-cultural M&A, thereby facilitating the adaptation of management practices to the im-pacts of cultural differences. Originality/value By integrating the theories of resource dependence and transaction costs, this study examines the reversal effect of cultural differences between merging companies on post-M&A performance. The authors use a PLS-SEM to empirically analyse the main effects and reveal three transmission mechanisms.

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Section: Methodsmentioning

confidence: 99%

Section: Econometric Modelmentioning

confidence: 99%