How Does National Culture Impact Internalization Benefits in Cross-Border Mergers and Acquisitions?
Version of Record online: 7 JAN 2011
© 2011, The Eastern Finance Association
Volume 46, Issue 1, pages 103–125, February 2011
How to Cite
Steigner, T. and Sutton, N. K. (2011), How Does National Culture Impact Internalization Benefits in Cross-Border Mergers and Acquisitions?. Financial Review, 46: 103–125. doi: 10.1111/j.1540-6288.2010.00292.x
- Issue online: 7 JAN 2011
- Version of Record online: 7 JAN 2011
- international mergers;
- cross-border takeovers;
We examine how cultural differences between bidder and target countries impact internalization benefits in cross-border takeovers. The value of internalizing intangible assets may increase if cultural differences create high transaction costs. On the other hand, integration difficulties between culturally distant acquirers and targets may reduce the value of internalization. Our results show that greater cultural distance (CD) has a positive influence on the long-run performance of bidders with high intangibles, suggesting that significant internalization benefits from technological know-how are realized when CD is great. These findings highlight the importance of national culture when examining internalization benefits in cross-border mergers.