A Study On The Impact Of Cultural Distance On The Performance Of Chinese Enterprises In Cross-Border M&A

Cultural distance is the degree of difference in core values between countries.Cultural distance is a major problem for Chinese enterprises in cross-border mergers and acquisitions.In recent years,Chinese enterprises have carried out a large number of cross-border M&As,and the scale of cross-border M&As in China is growing rapidly.However,only some Chinese enterprises have enhanced their value through cross-border M&A,and more cross-border M&A enterprises have not achieved their goals.There are many reasons for the failure,one of which is the cultural factor.There are many cases of M&A failures caused by cultural differences,and the risks and obstacles brought by culture can no longer be ignored.Under the initiative of China's‘One Belt and One Road' and other policies,China will inevitably deepen its opening up to the outside world and strengthen economic and trade exchanges with other countries in the future.Any Chinese enterprise carrying out economic and trade cooperation with foreign countries will inevitably face the impact of cultural differences,so we must attach great importance to the negative effects of cultural distance.To explore the impact of cultural distance on the performance of cross-border mergers and acquisitions can help enterprises to better deal with the obstacles caused by cultural differences.Based on this,this paper takes China's listed companies as the research object,uses factor analysis to comprehensively evaluate their performance,and uses multiple regression analysis to investigate the impact of cultural distance on the performance of cross-border mergers and acquisitions of Chinese listed companies.At the same time,we examine the variable---the overseas expansion ability,to see whether it plays a regulatory role or not.The empirical results show that after the event of M&A,when the enterprise holds less than 100%of the equity of the target enterprise,the greater the cultural distance between them,the worse the performance of cross-border M&A indicating that the cultural distance has hindered the performance of cross-border M&A.Cultural distance causes differences in values and ways of thinking between the two sides of M&A,which increases the difficulty of deal,requires enterprises to pay more time and energy to communicate and coordinate,and increases the cost of enterprises.Excessive cultural distance affects the efficiency of communication between the two sides,hinders knowledge transfer,makes it difficult for both parties to combine their advantages,and then has a negative impact on the performance of M&A.The overseas expansion ability of enterprises is a regulatory variable,which plays an important role in the optimization of the model.Overseas expansion ability can help enterprises to better expand overseas markets and deal with the business problems caused by cultural barriers,which also gives enterprises some enlightenment to solve the negative impact caused by culture.Finally,based on the results of theoretical analysis and empirical test,this paper puts forward some suggestions,hoping to be helpful to China's cross-border M&A enterprises.