A Study Of The Impact Of Culture Distance And Institutional Distance On Cross-border M&A Performance

With the introduction and implementation of the "Belt and Road" initiative,the number and scale of M&A by multinational companies in countries along the "Belt and Road" are increasing.Cross-border mergers and acquisitions are a very important channel for Chinese companies to enter the international market.The performance of cross-border mergers and acquisitions is an important indicator to measure the results of cross-border mergers and acquisitions of Chinese companies.Therefore,the influencing factors of cross-border mergers and acquisitions performance have also become the focus of our research;the culture and system of the host country have a profound impact on the entry,production,operation and management of multinational companies.Therefore,this article selects the two influencing factors of cultural distance and institutional distance to explore how cultural distance and institutional distance affect the performance of cross-border mergers and acquisitions.Based on the theory of outsider disadvantages,institutional theory,and international production compromise theory,this article uses the return on total assets one year after the completion of mergers and acquisitions to measure the performance of cross-border mergers and acquisitions,and studies the cultural distance between the host country and China in the year of mergers and acquisitions by multinational companies.The impact of institutional distance on the performance of cross-border mergers and acquisitions.This article selects 118 cross-border mergers and acquisitions of Shanghai and Shenzhen A-share listed companies in the "Belt and Road" countries from 2013 to 2018 as samples,involving 108 Shanghai and Shenzhen A-share listed companies in 17 "Belt and Road"host countries.The empirical results show that cultural distance has a significant negative impact on cross-border M&A performance;institutional distance has a significant positive impact on cross-border M&A performance.Based on the empirical conclusions of this article,in the process of China’s "One Belt One Road" initiative,Chinese companies must pay attention to the choice of the host country where the acquired party is located before conducting cross-border mergers and acquisitions,especially the impact of cultural distance and institutional distance on the performance of multinational companies’ mergers and acquisitions.In order to enhance the effect of cross-border mergers and acquisitions,multinational companies should enrich the cultural background of their employees,reduce the cultural differences between employees in the host country and employees in the home country,give employees full trust,and enrich cultural creativity;China should also improve its own system,strengthen government governance,and adhere to the system Self-confidence,while respecting the host country’s system and development path,maintaining a certain institutional distance from the host country,and continuously optimizing the investment layout in countries along the "Belt and Road".