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Friend with benefits: Evidence from director's corruption culture on mergers and acquisitions

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  • Chen, Robin
  • Li, Shenru
  • Li, Wen
  • Mu, Yayu

Abstract

This study investigated the effects of the culture of corruption among independent directors on mergers and acquisitions (M&As) in 1996–2015 in the US. The study measured the corruption culture by investigating independent directors’ surnames and countries of origin. The results demonstrated the important role played by corruption culture: higher levels of corruption culture led to higher deal valued M&A activities. Moreover, firms tended to acquire targets with similar levels of corruption culture. The results were more pronounced for firms with poor corporate governance, weak religious norms, and low analyst coverage. Overall, the results showed the importance of both corruption and culture similarity in M&A outcomes.

Suggested Citation

  • Chen, Robin & Li, Shenru & Li, Wen & Mu, Yayu, 2024. "Friend with benefits: Evidence from director's corruption culture on mergers and acquisitions," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 112-127.
    • Handle: RePEc:eee:reveco:v:93:y:2024:i:pa:p:112-127
    DOI: 10.1016/j.iref.2024.03.017
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    More about this item

    Keywords

    Independent directors; Corruption culture; Corporate governance; M&A;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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