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Management team cultural alignment and mergers and acquisitions

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  • Zhao, Hong

Abstract

We examine the way cultural alignment between acquirer and target management teams affects the success of M&As. By tracing managers’ cultural origins based on their family names, we obtain two measures of cultural alignment: cultural distance and origin similarity between the management teams. The regression results show that firms with culturally aligned management teams are more likely to form merger-pairs. Regarding merger-performance, cultural alignment increases acquirer–target-combined announcement returns, acquirers’ post-merger operating and market performance, and the integration of targets’ top executives. Taken together, our results suggest that managers’ cultural alignment is an important determinant of merger success.

Suggested Citation

  • Zhao, Hong, 2022. "Management team cultural alignment and mergers and acquisitions," Finance Research Letters, Elsevier, vol. 46(PB).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pb:s1544612321004359
    DOI: 10.1016/j.frl.2021.102448
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    References listed on IDEAS

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