Social trust distance in mergers and acquisitions
Journal
Journal of Banking and Finance
ISSN
0378-4266
Type
journal article
Date Issued
2023
Author(s)
Abstract (De)
We study the role of regional cultural differences in M&A transactions in the U.S. A larger social trust distance between two companies reduces the likelihood of them combining via an M&A transaction and results in lower completion rates and longer completion times, indicating higher complexity in deal execution. However, a larger social trust distance is also associated with higher gains from mergers, as measured by acquirer and combined announcement returns and medium-term buy-and-hold abnormal returns. This suggests that for these announced deals, the synergy potential is high enough to offset the costs induced by the large cultural distance.
Language
English
Refereed
Yes
Publisher
Elsevier
Volume
149
Subject(s)
Division(s)
Eprints ID
267716