Review of Quantitative Finance and Accounting

, Volume 53, Issue 3, pp 633–661 | Cite as

Mergers & acquisitions and the acquirer-target cultural differences

  • Wai-Ming Fong
  • Kevin C. K. LamEmail author
  • Pauline W. Y. Wong
  • Yiwei Yao
Original Research


We investigate the impacts of cultural environment on mergers and acquisitions (M&A) in the U.S. To measure the cultural environment of a firm, we use several variables of cultural dimension widely adopted in the literature, mainly the percentage of religious adherents and the percentage of Republican supporters in the county where the firm is headquartered. We compute alternative summary variables to proxy for the overall differences in cultural environment between firms. We find that the bigger cultural differences between two firms, the less likely that the firms will start an M&A negotiation. However, once an M&A negotiation has started, the cultural differences have a small positive impact on the negotiation success rate, a significantly positive impact on the immediate abnormal return of the target, and a small positive impact on the long-run abnormal return of the acquirer, but no negative impacts on other negotiation outcomes.


M&A Cultural environment Cultural distance USA 

JEL Classification

G14 G34 M14 Z1 



We thank Raymond Kan, Stephen Siegel, Cong Wang, seminar participants at the 2016 American Accounting Association Conference, and two anonymous reviewers for helpful comments. All remaining errors are our responsibility.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  • Wai-Ming Fong
    • 1
  • Kevin C. K. Lam
    • 2
    Email author
  • Pauline W. Y. Wong
    • 2
  • Yiwei Yao
    • 2
  1. 1.Department of FinanceThe Chinese University of Hong KongShatinHong Kong
  2. 2.Department of AccountancyHang Seng Management CollegeShatinHong Kong

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