Do Cultural and Governance Differences Impact Cross-Border M&As from Developed Countries into the BRICS Economies?

Abstract

The aim of this research is to investigate the impacts of cultural and governance differences between the acquirer and the target on cross-border mergers and acquisitions. Specifically, it is explored the impact on completed deals between acquirers located in developed economies and targets situated in the BRICS economies. By constructing a dataset including seven acquirer nations, six cultural variables, and three governance variables, it is found evidence that three cultural dimensions, Individualism, Masculinity and Uncertainty Avoidance, and the three dimensions of governance, Rule of Law, Control of Corruption, and Voice and Accountability have effects on the total number, and on the volume, of completed deals. The empirical results show that the dimensions have different effects. In fact, higher differences in terms of Masculinity, Uncertainty Avoidance, and Voice and Accountability will reduce the total number and volume of deals. In contrast, when nations are more different in terms of Individualism, the number, and volume, of mergers is higher as well. Furthermore, the effects of the interaction between cultural and governance dimensions have been investigated.