Journal of Banking & Finance Vol. 149 2023
Social trust distance in mergers and acquisitions
open access
Abstract
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.
- DOI
- 10.1016/j.jbankfin.2023.106759
- Volume
- 149
- Pages
- 106759
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib