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Who asks for higher merger and acquisition premiums? The perspective of national collectivism

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  • Riguang Wen

Abstract

This study explores the impact of a collectivist culture on the premiums of cross-border merger and acquisition (M&A). Using a sample of cross-border M&A transactions conducted by Chinese firms, this study empirically investigates the role of a tendency toward collectivism in the target firm’s country in M&A pricing. The results show that collectivism in the target firm’s country, measured as an institutional collectivist tendency and an in-group collectivist tendency, negatively correlates with M&A premiums, in both statistically and economically significant ways. A one-point increase in institutional collectivism and in in-group collectivism can reduce the M&A premium by around 30 and 20 percentage points, respectively, ceteris paribus. I draw from the empirical results the conclusion that national collectivism has a great impact on M&A premiums. This conclusion is significantly revealing about the cross-border M&A decisions of enterprises in emerging markets.

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  • Riguang Wen, 2017. "Who asks for higher merger and acquisition premiums? The perspective of national collectivism," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 5(2), pages 196-210, April.
    • Handle: RePEc:taf:rcjaxx:v:5:y:2017:i:2:p:196-210
    DOI: 10.1080/21697213.2017.1339431
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