The Effect Of Cultural Distance On Cross-Border Merge&Acquisition Performance

Since the "Belt and Road" initiative was put forward,the foreign direct investment of Chinese enterprises to the "Belt and Road" countries has been increasing year by year,and the cross-border M & A activities have been increasing rapidly.However,research shows that the failure rate of cross-border M & A activities of Chinese enterprises is very high,and the performance of cross-border M & A of most enterprises has not reached the expected goal,scholars at home and abroad agree that cultural factors play an important role in this process.Therefore,the study of the impact of culture on cross-border M&A performance is of great theoretical and practical significance.From the perspective of "Belt and Road",this paper attempts to make an empirical study on the cross-border M & A between China and the "Belt and Road" countries,this paper examines the role played by the cultural distance between countries,and tries to analyze the moderating role played by the nature of ownership.The existing conclusions on the impact of cultural distance on cross-border M & A performance are not consistent.After combing the relevant theories,this paper holds that there is a negative correlation between cultural distance and six dimensions of cultural distance and cross-border M & A performance,the property of ownership will play a significant role in the adjustment.Based on the above hypothesis,this paper makes an empirical study on 126 cross-border M & A cases of Chinese listed companies in Belt and Road countries from 2007 to 2017,first,this paper empirically tests the influence of total cultural distance on the performance of cross-border M & A of "Belt and Road" state-owned enterprises through Hofstede’s cultural distance index,and then further tests the six sub-dimensions of cultural distance,finally,we add the property of ownership as a moderating variable to study its influence.The empirical results show that under the control of the size of the acquiring firm,the age of the acquiring firm and the national competitiveness index,cultural distance has a significant negative effect on the performance of the "Belt and Road" state-owned enterprises in cross-border M & A,in the six dimensions,the cultural distance between the collectivism dimension and the uncertainty avoidance dimension has a significant negative effect on the cross border M & A performance,while the cultural distance between the power distance dimension has a positive effect on the cross border M & A performance,the cultural distance of male / female dimension,long / short-term orientation dimension and indulgence / restraint dimension on M & A performance is not clear.In the regression of the moderating variable that includes the nature of ownership,we find that state-owned enterprises can reduce the negative effects of cultural distance on the performance of cross-border M & A more effectively than private enterprises,that is,state-owned enterprisesplay a positive role in regulating the effect of cultural distance on cross-border M & A performance.Finally,according to the research results,this paper from the government and enterprise levels put forward the corresponding countermeasures and suggestions.The innovation of this article is mainly embodied in the following aspects.First,the previous literature on the impact of cultural distance on cross-border M & A performance is mostly based on the developed country market,and seldom studies the developing country market,while most of the research on Chinese enterprises focuses on listed companies,there is no relevant research on the "Belt and Road",this article adds this perspective.Secondly,in terms of research methods,most of the previous literatures focus on the performance of M &A in the current year and one-year period.This paper holds that after M & A,enterprises need to go through a period of cultural integration to achieve the desired results,so take a longer-term perspective.In addition,this article divides the cultural distance into six dimensions to carry on the more concrete research.The results of this study validate the negative influence of cultural distance and the positive role of ownership in the process of cross-border M & A by Chinese firms in Belt and Road.