The Impact Of Corporate Governance On Cultural Difference Effect Of Chinese Enterprises Cross-Border Mergers And Acquisitions

With further deepening of globalization and integration, the national competition is fiercer. Along with the implementation of China’s going-out strategy, more and more Chinese enterprises go into transnational mergers and acquisitions. After becoming one member of WTO, transnational mergers and acquisitions exhibit a trend of rapid growth in both quantity and scale. As M&A in China started rather late and related problems bumped up in the process of development, the proportion of successful M&A is fairly low. Frankly speaking, the cultural difference has an important influence on enterprise’s cross-border M&A performance. Due to the ignorance of cultural difference, lots of enterprises in cross-border M&A meet problems related to cultural integration and eventually lead to failure. Therefore, how to reconcile cultural conflict in the aftermath of M&A for improvement of transnational M&A performance is an urgent problem right now in China. Meanwhile, it is also research direction for domestic scholars.This paper, based on79cases of Chinese cross-border M&A case during the year2001to2011as research samples. Combined corporate governance mechanisms of insiders represented by equity structure and outsiders represented by independent directors with the cultural difference as interaction item, analyzes how cultural differences between countries affect the cross-border M&A performance and how corporate governance mechanisms adjust the Relationship between cultural difference and performance. The results show that the cultural difference and cumulative abnormal return is in significantly negative correlation. Equity concentration and proportion of independent directors can effectively adjust the relationship between cultural difference and M&A performance. The differences of power distance and individualism, are negative correlative with M&A performance. Equity concentration can effectively adjust it. But the difference of masculinity is positive correlative with M&A performance. Besides the masculinity, independent directors can effectively adjust the relationship between the other four dimensions and M&A performance. Finally, based on the results of the analysis in this paper, we put forward the relevant policy recommendations from two aspects of enterprise and government.